40 FALL 1988

Banks in Trouble Abortion and the Law 1------Board of Visitors

FALL 1988 40 (VOL. 23, NO.1)

FROM THE DEAN

2 The Advanced Curriculum Striking a balance between depth and breadth. By Paul Brest

FEATURE ARTICLES 4 HighTech The dynamic new world ofhigh technology demands fresh approaches to law and legal education. An interview with.John H. Rlrton STAFF 10 DEPARTMENTS Editor: Constance Hellyer Abortion and the Law Associate Editor: Jo Ann Coupal 18 Art Director: Barbara Mendelsohn What would happen ifthe Supreme Court over­ School ews Designer, Board of Visitors Report: turned Roe v. Wade? Less than you might think. Nancy Singer Student intern: Helen Surh (AB'89) ByJohn Kaplan Production artists: Joanna McClean, 58 Elizabeth Fischbach Class Notes STANFORD LAWYEH. (I~SN 0585-0576) is published semi-annually for alumni/ae 14 and friends of Stanford Law School. Correspondence and materials for pub­ Banks in uouble lication arc welcome and should be sent 82 to: Editor, Stanford Lawyer, Stanford Something's got to give. Here are some innovative In Memoriam Law School, Stanford, CA 94305-8610. proposals. Copyright 1989 by the Board of Trustees of the Leland Stanford Junior Universiry. Reproduction in whole or in By Kenneth E. Scott 88 part, without permission of the pub­ Alumni/ae Gatherings lisher, is prohibited. Photocopies of indi­ vidual articles may be requested from Bell Communications Research, Inc., BOARD OF VISITORS Room PYA 1G-' '4, 6 Corporate Place, Piscat3\vay, NJ 08854- 92 Indices: Articles published since 1980 Letters are listed in Currenr Law Index, Legal­ Trac, and Dialog's Legal Resource Index. 33-48 Issues of the magazine since 1980 are Report on the 1988 Meeting-a hard-working series available on microfiche through William S. Hein & Co., Inc., 1285 Main Street, of sessions on, among other things, three developing Back Cover Buffalo, NY '4209. academic programs. Coming Events Q :no ~ z Q o ~ (J)

On Legal Education: The Advanced Curriculum

By Paul Brest

HEREhas been a growingsense amongboth faculty andstudents thatouradvanced curriculum is in need ofrevision. By contrastto the first year, which excites and engages almost all students, the second and third years seem somewhat dull. Students have little sense of progression-of deepening knowledge or of greater challenge- as they move from one year to the next. This problem is not peculiar to Stanford. Students encounter essen­ tially the same course of studies with the same limitations at all major law schools in the country. What I believe distinguishes Stanford is our commitment to embark on some bold experiments to redesign the ad­ vanced curriculum.

2 Fall 1988 STANFORD LAWYER It is noteworthy that two groups of faculty, responsible to discourage would-be business studying two different areas of legal study­ lawyers from understanding the needs of mi­ business law and public interest law-have nority groups and the poor, or to deny would­ come to the same conclusion: that the best be public interest lawyers a solid grasp of the legal education requires the development of world ofbusiness law. Furthermore, it would be courses that build on foundational knowledge a great error to encourage any law student to and then become more demanding semester commit himself or herself in advance to be­ by semester. There are skills and bodies of coming a business lawyer, poverty lawyer, knowledge-including knowledge about the litigator, or whatever. social, economic, political, andpracticalworlds Instead, we must offer students the oppor­ in which the law operates-that one must tunity to acquire the foundational knowledge master to be a well-qualified practitioner in necessary to pursue advanced courses in several any field of law. fields. A student who wishes to concentrate Moreover, the very process ofacquiring mas­ heavily in one area will find a plentiful curricu­ tery over one domain prepares students to lum available. But students may decide-as I master other fields of law as well. At one level, hope many would-to develop a reasonable the curriculum has always reflected this insight; degree of sophistication in more than one area, thus, the main purpose of the first-year courses to make connections among different disci­ is to teach students to "think like law­ plines, and to take advantage ofour rich curric­ yers." Beyond this, however, we believe that ulum to expand their intellectual horizons. a student who is well trained as a business I can assure you that we shall not compromise lawyer will be better prepared to learn how the breadth of knowledge that has become a to address the needs of poor clients, and vice hallmark of a Stanford legal education. versa, than someone who has had only a smor­ We are keenly aware of our responsibility gasbord legal education-a smattering of this, to prepare lawyers to address the problems of that, and the other. (My colleague, Gerald an increasingly complex, technical, and spe­ Lopez, has described our new approach as cialized world. But only a wide-ranging curric­ "anti-generic" legal education, because of the ulum can prepare ourstudents to address issues importance it ascribes to a student's gaining a that neither we nor they can presently antici­ degree of expertise in at least some area oflaw.) pate. Thus, the challenge facing us is to strike Thus, we are on our way to developing the balance between an education that is deep coordinated, sequenced courses ofstudy in sev­ and one that is broad. eral areas of legal study. In Law and Business, I look forward to keeping you informed of for example, background courses in accounting our continuing work on the advanced cur­ and financial economics provide the skills riculum, and to having your reactions as we necessary for the basic offerings in business work better to prepare our students for their associations, capital markets, and their regula­ futures as lawyers, policymakers, and public tion. These in turn lead to a rich choice of citizens. D advanced theoretical and prac- tical courses concerned with domestic and international busi­ ness transactions. The curricu­ "The challenge facing us is to strike lum in Lawyering for Social Change begins with courses in the balance between an education that legal and social theory and the Lawyering Process, which pro­ is deep andone that is broad." vide the foundation for advanced work, including supervised clini- cal practice at the East Palo Alto Community Law Project. These curricular developments are not intended to press students to pursue separate, mutually exclusive "tracks." It would be ir-

STANFORD LAWYER Fall I988 3 An interview with John H. Barton '68, Professor of Law

Professor Barton is orga­ nizing the School's new International Center for Law and Technology. He was a systems engineer before enrolling at Stan­ ford Law School, where he served on the Law Re­ view and was named to the Order of the Coif A member of the faculty since 1969, he teaches the seminar in Law and High Technology and courses in International Business, Human Rights, Law in Radically Different Cultures, and, on occasion, International Environmen­ tal Law and first-year Contracts. Barton is the author offour books, the most recent being The Regulation of International Business, with Bart Fisher (Little, Brown, 1986). An earlier book written with James Gibbs, Victor Li, and John Merryman, Law in Radically Different Cultures (West, 1983) received a certificate ofmerit from the Ameri­ can Society of International Law. Barton serves frequently as a consultant and adviser on legal technological issues to governmental and private bodies. He was interviewed July 19, 1988, by Constance Hellyer, editor of this mag­ azine and, coincidentally, a member ofthe National Association of Science Writers.

4 Fall/988 STANFORD LAWYER Technology is creating -on a global scale­ new forms ofproperty, new ways of doing business, and new social realities. What does this mean for law and the legal system? hy the current excitement over "Law and Technology"? Haven't lawyers been dealing with technolog­ ical issues since the Industrial Revolution?

There are big differences between today's high­ tech companies and traditional manufacturing firms. The life cycles ofhigh-tech products are typically shorter, and R&D budgets typically larger. A company's competitive advantage is more in technological innovation than in mar­ keting or manufacture. And the key resource is people-the human resource. This means a different kind oflegal practice, as anyone who compares a Palo Alto practice with an East Coast practice will tell you. More broadly, it's a phenomenon of the Pacific Rim - which is highly interlinked and is about to develop a host ofnew linkages with the diaspora of talent and money from Hong Kong. We're seeing the emergence of an inte­ grated industrial complex from California to Japan and Southeast and East Asia. This com­ plex is finding an essentially new way of doing business.

So it's not just a matter ofbeing faster and fancier?

Not at all. The nature of international compe­ tition has fundamentally changed. Today, our competition with other countries is in tech­ nological capabilities. Yet our trade law, for example, is designed for old market concepts "Technology is not that don't take into account product cycles and learning curves and, more seriously, don't recognize that there's a significant benefit acrown jewel-iti aprocess when another country has an innovation that develo~ we're able to use. We have an opportunity­ that you use and which we don't fully appreciate-for a free global market ofscientific ideas, a free market It dies if you of technology.

hide it:' lnstead, we seem to want to keep it to ourselves.

But that's foolish. Technology is not a crown jewel-it's a process that you use and develop. It dies if you hide it.

6 Fall I988 STANFORD LAWYER The Pacific Rim phenomenon is a dramatic be done before. So the legal system is going to example. It's a new form of technological com­ have to change its whole concept ofpersonal munity-international and becoming very income and wealth, and ofhow an employee is integrated. You have U.S. design, Japanese pro­ to be dealt with. duction techniques, and Southeast Asian or Mexican production. These companies see this Would you give an example? as absolutely natural, and they're introducing their new products in all the markets at the One interesting question is, What do you same time. It's a very important process and, "we're recoup against if a person or company goes interestingly, one that has developed without bankrupt? The assets of a high-tech enterprise significant diplomatic cooperation or nation­ seeing the are not so much in banks and factories as in to-nation agreements. There's a strong free­ people's heads. trade feel about it. emergence What issues have you been working on? What does this mean for the legal system? 01 an I've got three key projects for my sabbatical There are all kinds oflegal questions, such integrated this year. The first involves the regulation of as whether we need new international organi­ biotechnology in developing countries. zations, trade agreements, and commercial The problem is that many developing coun­ arrangements. We're going to see new forms industrial tries do not have the expertise or the budget to oftechnological joint ventures and changes evaluate new biotechnological products. Some in capital market flow (particularly ifJapan complex of those products present potentially enor­ opens up its capital markets). And we'll need mous benefits, but some also present signifi­ new approaches to commercial arbitration­ from cant risks. Since many such products-for Bob Mnookin's work in the Fujitsu-IBM soft­ example, medicines for tropical diseases­ ware dispute is a wonderful example. It's fun. California aren't going to be evaluated or marketed in the United States, it's up to the developing coun­ A lot oflawyers must be having fun, then! to Japan tries to decide which to adopt and how to reg­ Because technological issues seem to be crop­ ulate them. I'm trying to understand how their ping up in just about every legal specialty­ and regulatory systems now operate and will be DNA fingerprinting in Criminal Law, VCRs in visiting several nations in Asia this fall. Then, Copyright Law, nuclear power in Environ­ I may be able to come up with some sug­ mental Law, test-tube babies in Family Law... Southeast gestions for new laws or treaties or even training programs. It's happening everywhere. Technology is, I and I'm also currently working with the think, changing the way we face legal issues. National Academy ofSciences on the genetic In the past, whenever the character of prop­ East Asia:' diversity question. erty changed, the legal system had to change. When the key form ofproperty was land, the What do you mean by genetic diversity? legal system focused on real property. When the key kind ofproperty became intangibles The genes in food plants, medicinal plants, (such as share ownerships in corporations), and animals. A number ofdeveloping coun­ changes had to be made in the tax system, in tries perceive a problem that is, in essence: A how assets are collected- how, in fact, we firm goes down to Latin America and picks view wealth. up or buys cheaply seeds that remote farmers Now we're entering a new phase in which have been using and that may contain an the key form ofproperty is people's knowledge important disease resistance. The firm brings and personal capabilities, and the capabilities the seeds back to the U.S., breeds them into ofteams to do kinds ofprojects that couldn't an improved variety, and then sells the variety

STANFORD LAWYER Fall 1988 7 back in Latin America at a profit. than companies can change-making it easier Some people in the developing world feel to collaborate than reorganize. The collabora­ this is unfair. I don't think the problem is so tion may be healthy- but can sometimes raise bad- provided the developing nations have a antitrust issues-and often leaves behind any genuine chance ro develop their own breeding chance of distinguishing US. industry from industries. Moreover, the existing research sys­ foreign industry. tem works very effectively in many ways to benefit developing countries. But nevertheless There's been some concern lately about the this has been a point of tension, and I've theft or illegal export ofmilitary technol­ been asked, as someone who has written on "we ogy-such as the escape ofour method for this kind ofinternational legal issue,l to manufacturing quiet submarine propellers. work on it. Any comments? I've also been working on some questions should about international technology licensing. I think that our government greatly overrates Last spring a group ofstudents and Iorga­ recognize this problem. They forget that technology is nized a symposium with experts from all over changing so fast that our key defense is to stay the country.2 that a ahead of the competition. Obviously we have to control the export of military technology Is this about licensing foreign companies to prime and some other technologies. But unfor­ manufacture your products overseas? tunately, the way we run our program greatly form 01 hurts our industry. In part. We looked at why companies would choose to market a technology in this fashion wealth Because ofour emphasis on secrecy? rather than by manufacturing it here for sale abroad. There can be real economic advan­ I was thinking more of the problems and tages either way, as some of the experts at the is an delays that US. firms encounter in trying to get symposium explained. government approval for possible sales. This But we're also beginning to see another educated delay gives foreign competitors a chance to kind of technology licensing, that looks more make the sales instead. to development and marketing. Often now, person:' direct US. and Japanese competitors license Computers and communication technology each other for specific development programs. seem chameleon-like. Isn't it difficult to deter­ This reflects the fact that, for really new prod­ mine whether they might be used for military ucts, you often need technologies ofmore than purposes? one company. A small biotech company might have the expertise to develop a new drug, There's obviously room for reasonable dis­ while a big pharmaceutical company may be agreement about what you do and don't want more expert in manufacture and marketing, to export. My sense is that computers are one so the two get together. of the best ways to break down secrecy prob­ Another good example is when a biotech lems in the Soviet Union. company cooperates with a computer com­ pany to develop new kinds ofelectronic soft­ What was the focus ofyour text on regulating ware and instrumentation for the biotech international business? industry. Similar arrangements are being made between US. and Japanese companies with The book,3 which is actually a casebook, fol­ complementary expertise in the semiconduc­ lows a relatively traditional international tor industry. business law approach. There is, however, Basically what's happening is that the quite a bit on technology licensing and on character of the products is changing faster (Continued on page 49)

8 Fall1988 STANFORD LAWYER The Law School in Action

Progress to date A major new initiative LAW AND TECHNOLOGY PROGRAM STANFORD INTERNATIONAL CENTER FOR LAW AND TECHNOLOGY Legal issues raised by high technology have, over the past decade, become a major interest at Stanford Designed as an interdisciplinary forum for teaching Law School. Much has been done, and much is and research, the Center will explore legal issues­ planned. Some significant developments: both domestic and international-raised by advances in technology. Center plans complement By 1984 existing activities and provide for the following new • Coursework. High-tech issues are included in ventures: courses and seminars on intellectual property, environmental, business, and international law, • Research. Academic research on legal questions taught chiefly by Professors Barton, Gilson, posed by technological advances, entrepreneurship, Goldstein, Heller, and Rabin. and the global economy. • Fieldwork. Expanded opportunities for students 1984 to do research with high-technology businesses, • Seminar. Professors Brest, Heller, and Mnookin legal practitioners, and industry associations. team-teach "Computers and the Law," with guests • Publications. Rapid dissemination of research and from the high-tech legal and business community. scholarship through a working-paper series. • Advisory group. The Dean and faculty invite sev­ • Conferences and symposia. On such topics as eral expert practitioners to form a Law and High technology transfer, trade secrecy, and US.lJapan Technology Council. antitrust issues. • Student organization. Interested students estab­ • Summer institute. Annual programs for lawyers lish the Stanford Law and Technology Association from throughout the high-tech Pacific Rim eco­ (SLATA). nomic community. 1986 Founding sponsors • Conference. SLATA sponsors "How Government Baker & McKenzie· Brobeck, Phleger & Harrison· Policy Affects Private R&D" and publishes the Brown & Bain • Cooley, Godward, Castro, conference proceedings. Huddleson & Tatum· Fenwick, Davis & West· • Seminar. Professor Barton introduces "Law and Graham & James· Heller, Ehrman, White & High Technology," with input from practicing McAuliffe· Hopkins & Carley· McCutchen, Doyle, attorneys. Brown & Enersen • Morrison & Foerster· Susan H. Nycum, Esq.• Pillsbury, Madison & Sutro· Ware & 1988 Freidenrich • Wilson, Sonsini, • Working conference. SLATA and the Journal of Goodrich & Rosati International Law sponsor "Law and Economics of International Technology Licensing." •A comprehensive program. Law School begins organizing a "Stanford International Center for Law and Technology," with strong interdisciplinary and practitioner participation... THE lAW

COLOR LITHOGRAPH BY AUGUSTE RODIN. LEJARDIN DES SUPPLICES (PARIS. 1902). PLATE 6 (DETAIL). COURTESY OF THE METROPOLITAN MUSEUM OF ART. By John Kaplan Roe v. Wade did not, after all, come out Jackson Ely Reynolds of the blue. In the previous decade, Professor ofLaw twenty-seven states had liberalized abortion laws. Of these states, four permitted essentially free abortions, "WASHINGTON, D.C. - The Supreme and several others, including Califor­ Court today opened the door to pro­ nia, applied a somewhat restrictive hibitions against abortion at the state statute to provide what still amounted level. Greeted with jubilation by pro­ to free abortion. Although a backlash life activists, the decision effectively set in shortly after Roe v. Wade, we overturns the Court's controversial must not forget that at the time, 1973 decision in Roe v. Wade. Among the decision seemed to be the culmina­ the justifications offered by the Court tion of a national (indeed, interna­ for its reversal are technological ad­ tional) movement to relax the laws vances making fetuses viable at an on abortion. increasingly early state ofgestation... " Public opinion appears to have sta­ What if bilized, with those for abortion on it hasn't happened-yet. demand as numerous as those against. NO,But the members of the the Supreme A 1984 poll showed a strikingly even High Court who may be counted as split between respondents on whether solid supporters of Roe v. Wade num­ abortion should be allowed because ber only four, and they are elderly. At Court "the family has low income and cannot the same time, opponents of abor­ afford any more children"; the woman tion can be expected to carry on their changed "is not married and does not want crusade even if rebuffed in the upcom­ to marry the man"; or the woman ing Webster v. Reproductive Health "is married and does not want any Services case. Let us, then, engage in a its mind more children."l Similarly in 1986, the thought experiment: What if Roe v. Gallup poll asked its sample: "The Wade were, in fact, reversed? 7 U.S. Supreme Court has ruled that To begin with, the political battle • a woman may go to a doctor to over abortion would by no means end. end pregnancy at any time during the Overturning Roe v. Wade would sim­ first three months of pregnancy. Do ply permit-but not require-states to you favor or oppose this ruling?" prohibit or otherwise curb abortion. Nationwide, 45 percent said "yes," 45 In order for abortion to be effectively percent said "no," and 10 percent outlawed, legislatures in most states had no opinion.2 will have to pass, and their governors When, however, certain exceptional sign, new statutes. circumstances are considered, the This would present a number of public's willingness to permit abor­ difficulties to opponents of abortion. tion becomes overwhelming. About 80 In many states, the old anti-abortion percent of respondents support a statutes have been repealed, either to woman's right to have an abortion get rid of restrictions thought to be when the child was conceived "as a unconstitutional under Roe v. Wade or result ofrape"; when there is a "strong as part of new abortion restrictions chance of serious defect in the baby"; intended to be compatible with that and when the "woman's health is ruling. Moreover, if the putative over­ seriously endangered."3 ruling of Roe v. Wade were not com­ Disagreements over whether to plete but required certain particular compromise on such exceptions in exceptions or formalities, new abor­ order to gain passage for anti-abortion tion laws might have to be enacted in proposals can be expected to cause virtually every state, as was the case problems among "pro-life" advocates. some years ago with respect to capital One who regards abortion as murder punishment. will not tolerate lightly even those The most important obstacle to the exceptions found acceptable by 80 enactment of new anti-abortion laws percent of the populace. Catholic doc­ would, however, be the lack ofgeneral trine, for example, prohibits abortion public support for such a prohibition. even where childbirth will result in the

STANFORD LAWYER Fall 1988 11 death of both mother and baby-a long as traveling to an area of legal position that has already helped doom abortion is easier thanviolating the law the passage ofa constitutional amend­ ofone's own state, the great majority of menttooverturn Roe v. Wade. Another abortions performed would not even exception with wide acceptance­ be illegal. The demand for abortion when the baby is likely to be born appears to be relatively inelastic, and seriously deformed orotherwise defec­ those who want abortions want them tive-is felt by anti-abortion activists very much. Moreover, though to be particularly heinous. 4 increases in the effective price of abor­ The matter is further complicated tions bearmostheavily onthe poorand by the interplay between the legislature depress the number performed,6 the and the voting public (acting by initia­ availability of low-cost interstate bus tive or referendum). Anti-abortion transportation would probably pre­ activists, for various reasons including vent local abortion restrictions from their higher level ofcommitment, have having a major impact. considerably more political power in The problem of states that permit state legislatures than their numbers The demand for abortion but lie near others that forbid alone would indicate. In a direct vote the practice is a difficult one. States by the populace, however, the anti­ abortion appears liberal on abortion would be able to abortion forces will probably be far less subvert their neighbors' more restric­ effective. Even in Massachusetts, tive policies in a way that cannot be which one might have predicted would to be relatively done with capital punishment. Indeed, be a staunchly anti-abortion state, a abortion restrictions could be even 1986 referendum to prevent public inelastic, and more easily undermined than restric­ financing of abortions was soundly tions on guns, cigarettes or liquor, defeated. where there is at least contraband to In short, it is likely thatan overruling those who want be identified and seized. of Roe v. Wade would result-not in a States have, in fact, been known to general criminalization of abortion­ abortions want deliberately subvert the policy ofother but rather in a halting accretion of states to advance their own interests. localized controls, leading ultimately them very much. Nevada's permissive divorce law for to an awkward patchwork of jurisdic­ some time attracted a great deal of tions in which the procedure is either business from elsewhere, and its legal­ prohibited or allowed, or is allowed ization of gambling and perhaps even under varying sets ofconditions. Capi­ houses of prostitution have had the tal punishment provides an instructive same effect. Several states also seem to analogy. Though heavily supported have designed their lotteries to subvert by over 70 percent of Americans (and the anti-gambling policies of their hence considerably more popular than neighbors. anti-abortion laws), the death penalty A state in which abortion is illegal for murder is still not in place in some might attempt to criminalize a resi­ thirteen states and the District of dent's temporarily leaving the state to Columbia - and this someeleven years receive an abortion. However, such a after the Supreme Court's decision prosecution not only is fraught with 5 finally validating capital punishment. difficulties of proof, invasions of pri­ vacy, and perhaps even constitutional A Legal Hodgepodge problems, but also has the great disad­ vantage of bearing upon the consumer It is impossible, given these many vari­ of the illegal service rather than the ables, to predict which and how many provider. (Even before Roe v. Wade, the states will ban abortion. But unless woman who obtained an abortion was large blocks of contiguous states did typically not made a criminal, at least so, a less enforceable policy can hardly in part because that would make her be imagined. less likely to cooperate in the prosecu­ The reason is not that within-state tion of her abortionist. Moreover, if prohibitions against abortion would she were made guilty of a crime, she be so difficult to enforce (a matter we would in many states have to be consid­ will return to later), but rather that so ered an accomplice, with the result

12 Falll9SS STANFORD LAWYER that her testimony would have to be adapted to the abortion problem. In­ corroborated. But probably the most deed, it would face many of the prob­ important reason was that there were lems encountered by a state statute simply far too many women obtaining seeking to control the travel of its own abortions to prosecute.) residents by similar laws. Nor can a state prevent its citizens A statute making it a federal crime from receiving out-of-state abortions to perform an abortion on a resident by inhibiting information about such of another state might seem better services. 7 Any attempt would raise adapted to the problem. The closest difficult First Amendment issues and analogy would be the laws preventing probably be unenforceable as well. a gun dealer in one state from selling Even if enforceable within a state, such arms to a resident of another state.9 a ban on information could be readily The important point here is that overcome by telephoning or visiting a without some sort of national action, nearby state known to allow the provi­ any state anti-abortion laws passed sion of such information. in the wake of a Roe v. Wade reversal Professor Kaplan is a noted expert on could so easily be evaded that the Criminal Law and Evidence, and number of legal abortions performed Federal Dilemmas author ofleading texts in those fields. in the United States will probably not With Stanford since 1965, he has writ­ If the many political battles fought be significantly diminished. Whether ten on such sensitive and timely issues within states do indeed result in a the political climate of America at the as the abuse ofhard drugs, marijuana patchwork of states prohibiting or timethese issues arisewouldpermitthe laws, gun controls, and AIDS. The allowing abortion, the major anti­ weight ofthe federal government to be present article is based on his study, abortion effort would presumably brought to bear against abortion at all "Abortion as a Vice Crime-A What move to the national level. Pressure is, of course, another question. If Story" (unpublished monograph, would then be brought upon Congress 1987). to throw its weight against abortion. A Different World The research was supported by There are various ways this might be the Stanford Legal Research Fund, done. One is by making the perform­ The world has changed considerably made possible by a bequest from ance of an abortion (subject probably since Roe v. Wade, making it unlikely Ira S. Lillick and by gifts from other to certain narrow exceptions) a federal thatabortion law comparable in sever­ friends ofStanford Law School. crime. Another is by passing a law ity to that prevailing before 1973 could threatening to withhold federal medi­ reduce the number of abortions to cal care or other social service funds anything approaching 1973 levels. Too ease of the operation will ever regress from any state that permits abortions. many changes, both technological and to the levels seen before Roe v. Wade. II Though this latter course would most social, have taken place. In former days, abortions were usu­ likely coerce recalcitrant states into Technological advances. Methods ally performed by the surgical pro­ banning abortion, neither course is of determining pregnancy have pro­ cedure called D and C (for dilatation particularly attractive. The former gressed until today, for only about $10, and curettage), a relatively risky meth­ might raise serious constitutional a woman can purchase home testing od requiring the insertion into the issues, including Federalism concerns. kits that are at least as sensitive as uterus of a rakelike object. After the And the latterwould probably result in those used by physicians in 1973. Re­ twelfth week of pregnancy, even this lackadaisical enforcement by states search in this field is continuing. One procedure was customarily avoided on compelled to make the practice illegal. recently developed test, the enzyme the theory that the uterus had become Instead, the thrust of attempted immunoassay, can detect pregnancy as too large; abortion then tended to be anti-abortion legislation might be to few as ten days after conception.lO postponed until the sixteenth week, at use the interstate commerce power. States would probably not be able to which time saline abortion, an even Thus, Congress could make it a crime interfere with the distribution of such more complicated procedure in which to cross state lines to obtain an abor­ tests, because they are too useful for labor is induced, was used. tion. The rationale could be that the those who wish to bear children and Today, an entirely different pro­ federal government, ratherthan taking begin prenatal care as early as possible. cedure-suction, or vacuum aspira­ sides, was leaving abortion decisions to For women who do not want to be tion-is used in the great majority of the individual states and only interven­ pregnant, however, the tests offer a first trimester abortions and often up ing to prevent one state from subver­ means of detection that is quick, inex­ to the fourteenth week of pregnancy ting another's public policy. Though pensive, and entirely private. (by which time over 90 percent of all there are numerous analogies to this in The technology of abortion has abortions are currently performed). our federal criminal jurisprudence,8 also changed significantly-to a point such a solution does not seem well where it is unlikely that the safety and (Continued on page 52)

STANFORD LAWYER Fall [988 13 · ,- \ -- Recentfailures of commercial banks andthri:ft institutions have strained the u.s~ depositinsurance / system. Here are some possiblesolutions.' .

14 Fall I988 STANFORD LAWYER I

. ,

By Kenneth E. Scott '68 Ralph M. Parsons Professor ofLaw and Business

THE BANKS and thrift institutions of this country are experiencing great difficulties: This is generally known. What is less well known, however, is theextentofthe problem and the threat it poses to the solvency of the govern­ ment funds established to protect depositors. In this article Ishall briefly examine some of the problems and proposed solutions currently under discussion. The changing economic environ­ ment of the last two decades has had a revolutionary impact on financial in­ stitutions in this country and abroad. Technological advances in the compu­ ter and communication industries have drastically lowered the costs of trans­ mitting and processing information and thus of executing financial trans­ actions. Financial-services products have been redefined; the efficient scale of operation has been increased, en­ larging geographical market areas. The result has been a trend toward a worldwide integration of credit and capital markets. While in many ways exciting, these changes have exerted pressure on a system of legal regulation of banking in the United States that was designed in large part over fifty years ago. The loosening of some strictures on fi-

STANFORD LAWYER F.,I/ 1988 15 nancial institutions by the current consequences for the U.S. banking sys­ Administration has produced-along tem are concentrated in a relatively with the looked-for flexibility and small number of key institutions: as creativity of response among financial of September 30, 1986, for example, institutions- an inevitable measure of the nine largest money center banks uncertainty and exposure. held $51 billion in Latin American Commercial banks. The recent rise loans, representing 1.14 times their in bank closures indicates the diffi­ total capital. culties facing regulators. In the 35 years The financial exposure of such from the end of World banks is, in fact, worse War II through 1980 the than is apparent. Gener­ Federal Deposit Insur­ ally accepted account­ ance Corporation ing principles (GAAP) (FDIC) reported the clo­ require mark-to-market sure on the average of accounting for assets just 6 banks a year. Since held in trading port­ then the number has folios but not for assets been increasing sharply, being held to maturity in from 10 in 1981 to 42 in a loan or investment 1982, 48 in 1983, 79 in portfolio. The balance 1984, 120 in 1985, 138 sheets of most money in 1986, and 69 in just center banks, therefore, the first four months of do not reflect large 1987. The number of losses in the market "problem banks" has value of their interna­ also continued to We have two distinct choices: tionalloans or their true mount, being currently solvency. Some indica­ at 1,555 or 10.7 percent to make the deposit insurance tion of the extent of the of total banks. hidden losses may be As a result of its dis­ system viable, orto make it found in the decision bursements and losses, announced by Citicorp the $18-billion FDIC largely superfluous. on May 19, 1987, to deposit insurance fund sharply increase its has stopped growing, loan-loss reserves (by while the ratio of the $3 billion) to a total of fund to insured deposits $5 billion; that would has declined to 1.1 per­ correspond to a 40 per­ cent-the lowest level cent write-down of its since its inception. $12.8 billion in loans to its six biggest Thus far, most of the failures and Third World borrowers. Other large problems have been relatively small banks followed suit, and the FDIC agricultural or oil belt banks, but the may yet have to confront the possible assistance list included the nearly$40­ insolvency of another large money billion Continental Illinois National center bank. Bank in 1984. Lookingahead, there is a Thrift institutions. The potential distinct possibility of trouble at other problems of the FDIC have been large banks, due in substantial mea­ upstaged, however, by the visibly sure to the international debtsituation. urgent problems ofthe Federal Savings During the 1970s, the foreign lend­ and Loan Insurance Corporation ing activities ofU.S. banks expanded at (FSLIC), which insures accounts at a rapid pace, and by September 30, thrift institutions (savings and loans). 1986, foreign loans constituted $301 Beginning in 1981, the thrift industry billion or 11 percent of the total assets encountered adverse developments, of the U.S. banking system. The debt first in money market interest rates and service problems ofBrazil, Mexico and then in real estate markets, that ren­ Argentina have attracted wide atten­ dered a majority of the industry insol­ tion, but Peru, Chile, Bolivia, Venezu­ vent. J By 1983 it became apparent that ela, the Philippines, Liberia, Nigeria the $6 billion FSLIC fund would not and others are in difficulty also. The have the resources to close all the bank-

16 Fall £988 STANFORD LAWYER rupt institutions and payoff insured inherent tendency to self-destruct and accounts, so it embarkedon a program consequently require stringent super­ of keeping them in operation and vision if they are not to be led by postponing the day of reckoning. management into excessive risk and Gradually the liquid resources ofthe frequent insolvency. FSLIC dwindled to a level in May 1987 A third explanation attributes the of about $500 million. In terms of current difficulties to the deposit insur­ existing claims, that left the insurance ance system itself. The insurance pre­ fund insolvent to the extent of about mium is assessed at a uniform rate to $6 billion, while the FSLIC's estimate all institutions. No recognition is taken of the amount required to resolve the of the variations in risk presented by industry's insolvency rose to $23 bil­ variations in factors relevant to failure, lion. Estimates from outside observers such as the composition of asset port­ are on the order oftwice that sum. The folios, the matching of asset and response of Congress, in the Competi­ liability durations, leverage or "capi­ tive Equality Banking Act of1987, was tal adequacy," or managerial compe­ to allow the FSLIC to borrow enough tence. A bank can raise insured de­ to increase its resources by a mere $10.8 posits (which for the banking system billion. represent close to 80 percent of total In short, the U.S. deposit insurance deposits) at something approaching system is under considerable stress, the risk-free rate of interest, due to the and that leads to an inquiry into implicit government guarantee, and causation. invest them in risky loans and invest­ ments, keeping the higher expected Possible Causes rate of return. In short, the uniform premium structure creates an incentive The first explanation is that the nation­ for a bank to take higher risks than it al and world economies have simply would otherwise choose- an incentive been undergoing some random shocks that actually increases as the capital - more severe than most in some ratio ofthe bank diminishes. 2 areas, but the sort of thing that has TI1ese explanations of the current to be expected over the long run. If strains in the u.s. banking system are Professor Scott is a 1956 Stanford Law the deposit insurance funds are show­ graduate and past article editor ofthe law not mutually exclusive and may all ing signs of strain, it may indicate no review. Before joining the faculty in 1968, have a degree of validity. The one on more than that the annual insurance he had served as chiefdeputy savings and which I have focused my work con­ premium level (1/12th of 1 percent of loan commissioner for California (1961­ cerns the incentives created by a mis­ the deposit base) was set at too Iowa 63) and general counsel of the Federal priced premium structure and the pro­ figure fifty years ago when the statutes Home Loan Bank Board in Washington posals that have been made to correct were enacted. For a long time the funds (1963-68). He has co-authored two books: it, on the assumption that mandatory seemed adequate, but now the random Retail Banking in the Electronic Age (1977) deposit insurance will continue to be a fluctuations of events are catching up and Economics of Corporation Law and politically imperative feature ofAmeri­ with them. There is no fundamental Securities Regulation (1980). can banking. problem, except perhaps to correct an Currently a senior research fellow at the Hoover Institution, he holds the School's underestimation of the appropriate Ralph M. Parsons Professorship in Law Some Proposed Solutions premium level. and Business. A second explanation is that recent The present article was drawn by the In face of the pressures on the deposit events have revealed a need for better editor from Scott's extended monograph, insurance system, we have, I think, two supervision of banking. Indeed, bank­ Domestic Bank Regulation in a World of distinct choices: to make the deposit ing supervisors are always saying that International Banking (John M. Olin Pro­ insurance system viable, or to make they need more regulatory authority­ gram in Law and Economics, Working it largely superfluous. The second over capital ratios or conflicts of inter­ Paper No. 35, September 1987). choice-which is the more radical and est or international lending or enforce­ thus perhaps more interesting-will be ment techniques. Their critics, on the discussed later in this article. But first, other hand, are always saying that the let me briefly indicate the kinds of supervisors do not exert their exist­ approaches thathave been proposed to ing authority forcefully enough. Both improve the viability of the system as supervisors and their critics seem to now constituted. assume that, unlike other business enterprises, banking firms have an (Continued on page 55)

STANFORD LAWYER Fall1988 17 "In this corner, a man prone to costly and lengthy litigation."

New Center TANFORD Uni­ disputes where litigation nitive psychologist Amos versity made a and other adversarial Tversky, and game theorist Promotes major commit­ methods are needlessly Robert B. Wilson. ment to the study costly and time-consuming. SCCN is funded by the Research in of alternative The new Center consti­ William and Flora Hewlett methods of dis­ tutes "a broadly based Foundation, with addi­ Conflict pute resolution effort to identify barriers to tional support from the Resolution (ADR) with the the resolution of conflicts Law School, Graduate establishment and develop strategies for School of Business, School this fall of the reaching better, quicker of Humanities and Sci­ interdisciplinary "Stanford negotiated settlements," ences, and several individ­ Center on Conflict and says Mnookin, who holds ual and corporate donors. Negotiation." Directed by the Adelbert H. Sweet Pro­ A solid beginning. With Law Professor Robert H. fessorship in Law. The more than $200,000 in Mnookin and housed core faculty, in addition to start-up funds, the new in the Law School, SCCN Mnookin, consists of Center has already engaged is designed to promote Nobel laureate economist a full-time associate direc­ research and education on Kenneth J. Arrow, social tor-Daniel R. Abbasi, approaches to the many psychologist Lee Ross, cog- MA '88 (Political Science)

18 Fall 1988 STANFORD LAWYER -and launched a num- L6pezNamed PROFESSOR Gerald P. "Jerry Lopez is one ber ofkey programs. Lopez has been appointed of the outstanding law Applications are being to Montgomery to the Kenneth and Harle teachers in the country," accepted from law and Chair in Public Montgomery chair in Pub­ said Dean Brest, in an­ other Stanford graduate lic Interest Law. nouncing the new appoint­ students to become SCCN Interest Law A 1974 Harvard Law ment. "Beyond this, he Fellows and for research graduate, Lopez began is a true innovator in legal grants of up to $2,500. teaching here in 1984 as a education, whose ideas Planning has also begun on visitor and became a ten­ for reforming the law a spring 1989 workshop ured member of the faculty school curriculum carry for legal practitioners. the next year (see Stanford far beyond the area of The Center is in addition Lawyer, Fall 1985, pages public interest law." about to distribute the first 39-40). He had previously Creative approaches. five in a projected series been a professor at UCLA. Lopez is currently develop­ ofworking papers. These In 1987 the StanfordLaw ing a program ofsequenced includethreefaculty studies, graduating class voted to courses, Lawyering for So­ plus the top two student award him the John B. cial Change, concerning papers submitted in the Hurlbut Award for Excel­ University's new Richard Jerry L6pez lence in Teaching. (Continued on next page) S. Goldsmith Award com­ petition for research in dispute resolution (see Stan­ mutually damaging com­ ternal conflict. One intrigu­ The creation of the new ford Lawyer, Spring 1988, mercial dispute between ing finding is that, in the Center as the focal point of pp. 39-40). Law students Pennzoll and Texaco. minds of decision makers, such efforts is an exciting Gillian K. Hadfield, JD Mnookin is best known, "losses" loom larger than development for the Law '88, and]. Bradley John­ however, for an elegant equivalent "gains." School and the profession. ston, JSM '88, were the exercise in applied conflict Ross, a professor ofpsy­ In the words of Dean Brest: first winners. settlement: the arbitration chology, has done a series "It is clear that much of the Another complementary (with John L. Jones) of the of studies indicating that future ofthe legal system activity - in which all five IBM and Fujitsu dispute disputants tend to devalue relies on alternative dispute SCCN principal investiga­ over property rights to soft­ concessions and proposals resolution. The engage­ tors participate-is the ware programs. coming from their advers­ ment ofsocial scientists Interdisciplinary Seminar Arrow, who holds dual ary. This research helps from a variety of fields will on Decision, Conflict and Stanford appointments as explain the value of third­ help provide the theoretical Risk. Open to students Joan Kenney Professor of party mediators in remov­ foundation for a better un­ throughout the Univer­ Economics and Professor ing this source of bias, as derstanding ofhow to put sity, this seminar is cross­ of Operations Research, well as the often disappoint­ that into practice." listed in the schools of has been studying the role ing response to unilateral Individuals and organi­ Law and Business and the of information in individ­ concessIOns. zations interested in ADR departments ofPsychol­ ual and collective decision Wilson, who is the can become Center Affili­ ogy, Economics, and Oper­ making, particularly how Athol! McBean Professor ates and receive regular ations Research. Law economic and social con­ ofEconomics at the Grad­ updates on its work. For students have further op­ text influences the course, uate School of Business, further information about portunities to study ADR form, and outcome of employs game theory to in­ this and other SCCN activ­ in courses like Mnookin's negotiations. vestigate communication ities, write or call Daniel Dispute Settlement: Nego­ Tversky, the Davis-Brack problems and other inef­ Abbasi, Associate Director, tiation and Mediation Professor of Behavioral ficiencies in the negoti­ Stanford Center on Con­ (see page 41). Science in the Department ation process. Recently flict and Negotiation, A broad foundation. of Psychology, has won a he has been researching Crown Quad, Stanford, The SCCN faculty brings MacArthur Prize and the strikes and other methods CA 94305-8610; (415) a wealth of interests and American Psychological used to drive up the costs 723-2574. D experiences to the inter­ Association's Distinguished ofdelay in reaching agree­ disciplinary enterprise. Scientific Contribution ment. He is also exploring Reported by Kathleen O'Toole, Mnookin is currently Award. He investigates the idea that under some Stanford News Service conducting one of the barriers to conflict resolu­ circumstances (such as largest, long-term studies tion by examining how, market trading), compu­ ofdivorce ever done in under conditions of uncer­ terized procedures may be America. And with Wilson, tainty, individuals make preferable to face-to-face he recently analyzed the judgments and resolve in- negotiations.

STANFORD LAWYER Fall 1988 19 Lopez Appointed the representation of indi­ Law Review, and a text middle-class clients with (continued) viduals and groups who coauthored with Addison civil rights claims. are politically and socially Mueller and Arthur I. Lopez, who is California subordinated (see page Rosett, Contract Law and born, grew up in the East 41). "Working with subor­ Its Application (3rd ed., Los Angeles barrio, at­ dinated peoples requires Foundation Press, 1983). tended a Catholic high training in a range of tradi­ Supreme Court case. school, and graduated in tions and skills not usually Lopez, in a 1987 case 1970 from the University of covered in the law school before the U.S. Supreme Southern California. His curriculum," he said in Court, successfully de­ Harvard Law education a recent interview. "Stu­ fended the principle of was followed in 1974-75 dents interested in becom­ full compensation for the by a clerkship with Chief ing public interest lawyers legal fees of clients whose Judge Edward J. Schwartz need to learn not only the civil rights have been vio­ ofthe U.S. District Court relevant laws, but also an lated. The case (Riverside v. in San Diego. understanding of the so­ Rivera) grew out of a law­ Lopez then helped found cial context, concerns, suit by some Chicano cit­ Jones, Adler, Cazares & and values ofthe person izens against the city of Lopez-a storefront San or group they plan to Riverside and several police Diego firm serving mainly work with." officers, for wrongfully poor and middle-class lat­ Lopez uses a variety of arresting and trying them inos and blacks. It was teaching approaches, in­ for misdemeanors for during this period that he cluding field placements which they were acquitted. represented the Rivera in community institutions, The city had lost the suit family in the case that ar­ classroom simulations, and but resisted paying the legal rived ten years later at videotaped exercises. He fees ordered by the trial the Supreme Court. has pioneered the concept judge in line with the Civil Lopez is married to of "lay lawyering" -the Rights Attorney's Fees Shelley Levine, a former idea that people who are Awards Act of1976. Stanford Law teaching fel­ not lawyers can draw on The Act is important be­ low (1984-86) and current their everyday problem-sol­ cause it "removed an eco­ staff attorney to Judge J. ving skills to perform some nomic barrier to aggrieved Anthony Kline of the Cal­ tasks traditionally thought people getting a lawyer," ifornia Court of Appeals, to require a lawyer. says Lopez. The city's at­ Northern District. Lopez His publications include tempt to avoid full pay­ and Levine live with their articles in the Journal of ment would, if successful, two young children in Legal Education, Harvard have undercut the ability of San Francisco. Law Review, and UCLA lawyers to serve poor and

THE MONTGOMERY The Kenneth and Harle funded the Montgomery which he has been associ­ PROFESSORSHIP Montgomery Professor­ Program for Clinical Legal ated since his graduation in ship in Public Interest Law Education, focused on the 1928 from Harvard Law was established in 1980. East Palo Alto Community School. A longtime leader Originally designated for Law Project. Other gifts in legal and financial circles, clinical legal education, include the Kenneth F. he is a director of Seaway the chair was first held by Montgomery Research National Bank of Chi- Anthony Amsterdam Fund (1974), Montgomery cago and a member of the (1980-81), who is now di­ Clinical Legal Education School's Board of Visitors. rector of clinical and advo­ Fund (1978), and Kenneth Mrs. Montgomery's cacy programs at New York and Harle Montgomery community activities University Law School, Public Interest Loan Fund include serving as a direc­ and then by Paul Brest for students doing summer tor ofthe Chicago Council (1983-87), the current Dean. work in the public service on Foreign Relations and The donors, Mr. and field (1983). the American National Mrs. Montgomery of Kenneth Montgomery is Theater Association, and Northbrook, Illinois, are now ofcounsel to Burke, as a trustee of the Scripps great and good friends of Wilson & McIlvaine, the Clinic and Research Hospi­ the School. In 1987 they Chicago law firm with tal in La Jolla. 0

20 Fall 1988 STANFORD LAWYER Supreme Occasions Stanford Law School in Washington

HE Great Hall of the TSupreme Court was Stanford's on the night of May 16, 1988. Billed as a "celebration of Stanford law alumni/ae," the black­ tie affair specifically hon­ ored the three Stanford graduates on the High Court: ChiefJustice Wil­ liam H. Rehnquist (AB/ AM '48, LLB '52), Asso­ ciateJustice Sandra Day O'Connor (AB '50, LLB '52), and Associate Jus­ tice Anthony M. Kennedy (AB'58). For Washington-area ChiefJustice William H. "Color-blind or affirmative "Traditional theories of alumni/ae, it was also a first Rehnquist presided with a action? The language of equal protection demand chance to meet Paul Brest most judicious reticence. the equal protection clause similar treatment for those in his relatively new role as doesn't say which path to similarly situated. But the Dean. University President follow." issues ofpressing concern Donald Kennedy provided -Paul Brest to most women-poverty, a warm introduction. sexual violence, child Many at the banquet support, and reproductive had participated earlier liberty-do not find them that day in the University similarly situated." festivities inaugurating the - Deborah Rhode Stanford-in-Washington program. Dean Brest had organized a noteworthy panel for an afternoon ses­ sion at the National Press Club, entitled "Constitu­ tional Equality in the 1990s." Moderated by ChiefJustice Rehnquist and broadcast by C-SPAN, the panel also included law professors John Hart Ely, "The battleground ofthe "There's a chasm between "I hope that the ideal of Gerald Gunther, Charles '90s will be de facto hurts the Supreme Court's vision color blindness-the idea Lawrence III, and Deborah to minorities- deciding ofequal protection and my that individuals warrant Rhode (see box). which laws that don't dis­ own. Mine is a vision with respect and treatment as Asecond panel, "Whither criminate on their face substance as well as form; a individuals, that condemns Deregulation," featured, against disadvantaged vision that demands inclu­ gross and often demeaning among others, Professor groups should nonetheless sion rather than rationaliz­ group generalizations­ William F. Baxter, the be strenuously reviewed." ing exclusion; a vision that will ultimately be realized, former Justice Department - John Hart Ely is suspicious of race and and that we not lose sight official who oversaw the gender-neutral practices of that ideal in the AT&T breakup. that produce discrimina­ meantime." Associate Dean Thomas tory results; a vision that is - Gerald Gunther F. McBride, a member of suspicious of discrimina­ the Stanford-in-Wash­ tion against the poor." ington Advisory Commit­ - Charles Lawrence tee, was also there for the celebration. 0 PHOTOS BY ED SOUZA. STANFORD NEWS SERVICE

STANFORD LAWYER Fall [988 21 Professors Babcock and Ely BARBARA ALLEN BABCOCK to equal opportunity and to the disadvantaged, and Honored by Other Law Schools Babcock's new degree public service." was conferred by the Uni­ Babcock, a 1963 Yale THE 1988 commence­ versity of Puget Sound in law graduate, was for ment season brought hon­ Tacoma, Washington. She many years a defense attor­ orary doctorates to two was also the featured speak­ ney, first with noted trial members of the faculty: er at the UPS law school's attorney Edward Bennett Barbara Allen Babcock graduation exercises on Williams (1964-66) and and John Hart Ely. Bab­ May 15. then with the Public De­ cock is the School's Ernest Puget Sound Law Dean fender Service ofWashing­ W McFarland Professor, James E. Bond praised ton, D.C. (1966-72). A while Ely has just been Babcock for upholding Stanford law teacher since named to the Robert E. the values of "professional 1972, she became the first Paradise chair. excellence, commitment woman to gain tenure and the first to be named COURTESY. MUSEUM OF FINE ARTS. BOSTON to an endowed chair (the McFarland Professorship). From 1977 to 1979 she also headed the Civil Divi­ sion of the US. Depart­ ment ofJustice. Professor Babcock is coauthor of a classic text on sex discrimination and ofa casebook on civil pro­ cedure. She is currently writing a biography of pioneering public defender Clara Shortridge Foltz.

Two wise owls (adapted from a wood engraving, "The Judges:' John Andrew & Son, U.S., 19th Century)

JOHN HART ELY John Ely-Stanford's Dean legal services." Harvard and Yale (where for the five years ending in During the Ely deanship, he held the chair in consti­ June 1987-was honored more than half the tenured tutionallaw) and a presi­ by the University of San and tenure-track faculty dential appointment as Diego, which also asked members hired were minori­ General Counsel ofthe US. him to speak at its May 17 ties and women. The East Department ofTranspor­ law commencement Palo Alto Community tation (1975-76). exercises. Law Project, the Mont­ Ely's1980book,Democ­ USD Dean Sheldon gomery Public Interest racy and Distrust: A Krantz cited Ely for "the Grant Program, and the Theory ofJudicial Review, successful recruitment of Cummins Public Interest earned him the 1983 tri­ highly qualified new fac­ Low Income Protection ennial award of the Order ulty members, including Plan were also initiated ofthe Coif. Now returned several women and minor­ on his watch. to teaching and research, ities," and for the launch­ A Yale Law classmate of he is focusing on the roles ing of new programs Babcock's, Ely was named of the President and "designed to involve stu­ to the Stanford deanship Congress in committing dents in public interest after teaching posts at both US. forces to combat. 0

22 Fall I988 STANFORD LAWYER Gunther win the Medal. Council trustees cited Gunther's Crowned with "status as the outstanding New Laurels constitutional scholar of this generation" and added THE Federal Bar Council that his forthcoming biog­ has bestowed its 1988 raphy ofHand made the Learned Hand Medal for award especially fitting. Excellence in Federal Juris­ The Federal Bar Council prudence upon Professor award came on top ofsev­ Gerald Gunther. The eral other recent tributes to award was presented at the Gunther (see Stanford Council's Law Day dinner Lawyer, Fall 1987, p. 39, on May 3, in the Grand and Spring 1988, p. 42) and Ballroom of the Waldorf­ simultaneously with yet Astoria Hotel in New York another-this by the edi­ City. The 1,200 Second Cir­ tors ofthe National Law cuit lawyers and judges Journal. In a May 2 article, present gave Gunther two "Profiles in Power," Gun­ standing ovations during ther was listed for the sec­ the course of an evening ond year running as one of that included his accep­ the 100 most influential tance remarks on the sub­ lawyers in America and ject ofthe late Judge Hand. credited with (among other Gunther, who holds the things) helping "sink ef­ School's William Nelson forts to convene a new con­ Cromwell chair, is one of stitutional convention." 0 a very few nonjurists to Gerry and Barbara Gunther in New York

Nobelists Grace The event, which took Kenney Professor ofEco­ nomics Program at Stan­ place May 5 in Kresge nomics, a professor of ford explores the use of Fete for Olin Law Auditorium, featured pre­ operations research, a sen­ economic analysis for a and Economics sentations by each Nobelist ior fellow by courtesy at broad range oflegal ques­ on the topic, "The Rela­ the Hoover Institution, and tions. Since the Program's Program tionship Between Law and a principal investigator in genesis in 1979, 46 working Economics." A far-ranging the new Stanford Center on papers have been issued. In TWO Nobel laureates in discussion ensued, with Conflict and Negotiation addition, nearly a hundred economics- Kenneth questions from a large (see page 18). scholars and policymakers Arrow and Milton Fried­ audience including mem­ Friedman, the eco­ have made seminar presen­ man- agreeably disagreed bers of the Board of Visi­ nomics Nobelist in 1976, is tations, and more than a on a variety ofissues, at tors (then on campus for currently a Hoover senior hundred attorneys have the inaugural lectures cele­ their annual meeting). The research fellow. He has attended workshops on brating the expanded and issue most raised? Unsur­ long been associated with economic analysis in litiga­ newly named John M. Olin prisingly, the Wall Street the University of Chicago, tion. For further informa­ Program in Law and Eco­ crash of October 19, 1987. where he holds the title of tion, call Barbara Adams, nomics (Stanford Lawyer, Olin Program director Paul Snowden Russell Dis­ Administrative Director, at Fall 1987, pp. 43, 47). A. Mitchell Polinsky tinguished Service Profes­ (415) 723-2575. 0 served as moderator, with sorofEconomics, Emeritus. an able assist from Dean The two laureates Brest. Polinsky is both the treated the Olin inaugural Josephine Scott Crocker audience to a display ofwit Professor ofLaw and Eco­ as sharp as their differ­ nomics, and a professor by ences. Thus invigorated, courtesy in the Economics they mingled with Law Department. School and other interested Arrow, who won the comers at the reception 1972 Nobel Prize in eco­ thatcapped the celebration. Kenneth Arrow nomic science, is theJoan The Olin Law and Eco- Milton Friedman

STANFORD LAWYER Fa/l/988 23 Commencement 1988 "NotAdios, but Hasta Luego"

PHOTOS BY JOHN SHERETZ HE Class of1988 re­ Tceived a sunny send-off June 12 at the School's 95th Commencement, which- in a break with tradition­ was held outdoors, on the lawn between Crown Quad and Meyer Library. Dean Paul Brest opened the festivities with a wel­ come to the 163 graduates and their more than 1,100 relatives and friends. Strik­ ingly diverse, the class con­ sists of 89 men and 74 women hailing from 28 states,1 territory, and 4 for­ eign countries. Thirty-nine are individuals of color, of whom more than a third are black, a third Hispanic, and the balance American The outdoor ceremony featured a talk by Hurlbut honoree Patricia Bryan. Indian or Asian.

of North Carolina, Chapel areas ofgeographic con­ Hill faculty, taught tax law centration being the West at Stanford during the Coast (45 percent) and the 1986-87 academic year. New England/Mid-Atlan­ In her Commencement tic region (47 percent). address, Bryan expressed Almost a quarter (23 per­ the following hope for the cent) are beginning with new graduates: "That you judicial clerkships. are able to use your legal Dean Brest, in his part­ training so that it does ing words to the class, said: make a difference in peo­ "You have helped shape ple's lives; that you retain a this community, and even sense ofcompassion for as you begin exciting new others as well as a sense of careers, you're still part humor; that you achieve a ofit. So I wish each of balance between your per­ you good luck-and say, sonal and your professional not Adios, but Hasta high academic accomplish­ lives ...; and that you do luego." D ment over the three years of something that you can law school. take pride in, that is consis­ Recipients of several The sale faculty honor tent with your own values awards and honors, in­ ofthe day- the John B. and beliefs, and that dem­ cluding the top academic Hurlbut Award for Excel­ onstrates to you and to oth­ achievers (see page 25), lence in Teaching-was ers that law does have the were announced at the presented by Class Presi­ capacity to do good." ceremony. In addition, dent Susan M. Woolley to The graduates were 44 members ofthe class former Visiting Professor headed for positions in graduated "with distinc­ Patricia L. Bryan. Bryan, a 22 states and around the tion," an honor recognizing member of the University world, with the largest

24 Fall I988 STANFORD LAWYER Awards Won Carl Mason Franklin by Graduating Prize in International Law: Gregory C. Shaffer. Students Richard S. Goldsmith Award, for the best re­ THE following honors search paper concerning and awards were earned dispute resolution: Gillian by members of the Class K. Hadfield andJ. Bradley of1988. Johnston (co-winners). Nathan Abbott Scholar, Olaus and Adolph awarded for the highest Murie Award in Environ­ grade point average over mental Law: Lynn D. Ful­ three years oflaw school: ler and Bruce D. Goldstein Gregory M. Priest. (Priest (second place). also earned the 1986 First­ R. Hunter Summers Year Honor, the 1987 Sec­ Trial Practice Awards, ond-Year Honor, and the given by officers ofSer­ Stanford Law Review, at 1988 Frank Baker Belcher jeants-at-Law to the best its annual banquet in April, Award in evidence.) student lawyers and wit­ bestowed these honors on Urban A. Sontheimer nesses in each trial: Mi­ graduating members. Third-Year Honor for the chael J. Barry, Daniel P. Board ofEditors Award second highest overall aver­ Collins, Daniel A. Counts, for outstanding editorial age: Stephen H. Warren. Manuel Sanjuan DeMar­ contributions: Daniel P. Order of the Coif: Priest tino, Scott F. Doering, Collins. and Warren, plus Jeffrey Curtis E. Floyd, Nathan J. Johnson & Swanson M. Bandman, Stuart A. Hochman, Noel Bridget Law Review Award to the Banner, Daniel Barton, Joyce, Victor M. Minjares, third-year member who Howard M. Privette II, made the greatest overall Christopher J. Raboin, contribution during his Jose Silva, and William B. or her second year: Mar­ Tate II. guerite T. Grant. Constance Baker Motley United States Law Week The 163 degree recipients included (left to right) Hui-Lin Award,givenby theNAACP Award for outstanding Shiau, William B. Tate III, Lisa Legal Defense and Edu­ service to Stanford Law Lindelef, and (below) a happy cational Fund: Greer C. Review: Michael L. trio consisting of Susan Mann, Bosworth (see page 26). Cheever. 0 Tom Rubin,and MarcyWilder.

Jonathan Bernhardt, Mi­ chael L. Cheever, Daniel P. Collins, MarianJ. Dillon, Mark S. Gimpel, Gillian K. Hadfield, Christy V. Keeny, Scott P. Klein, Richard D. Klingler, Robert S. Libman, Howard M. Privette II, and William M. Sage. Steven M. Block Civil Liberties Award: Linda S. Bosniak and Susan B. Mann (co-winners). Nathan Burkan Memo­ rial Competition, for the most outstanding paper on copyright law: Gillian K. Hadfield and Linda A. Newmark (second place). Moot Court 1988 Scalia Offers Tips on Oral Advocacy

THE standing-room-only audience gathered in Kresge on May 6 for the 1988 Marion Rice Kirk­ wood Moot Court Compe­ tition received an unex­ pected bonus-advice, from no less than Asso­ ciate Justice Antonin Scalia ofthe U.S. Supreme Court, on how to argue an appel­ late case. On stage as a judge for the final round Justices Broussard, Scalia, and Nelson put competitors Sutton and Hochman (left) and San Juan of the competition, Scalia and Banner (right) to the test. had this to say: • Welcome questions. James R. Sutton (both also gram, the nation's only pri­ Bosworth is spending "The worst thing in the 3L), received the Stanford vate scholarship program her first two postgraduate world is to have a cold Law Society ofSan Fran­ for black law students. Two years with Judge A. Leon court; the best is to get cisco and Marin Award as years ago another Stanford Higginbotham, Jr., of the questions." runner-up team. woman, Giji M. Dennard U.S. Court of Appeals, • Don't present your "You've seen good ex­ '86, was the recipient. Third Circuit. Now a re­ argument in its most amples of the art oforal Bosworth arrived at search associate for a book logical order. "Put your advocacy today," Justice law school with a BA in and courses at the Univer­ best point first, because Scalia said in closing. criminology and psychol­ sity ofPennsylvania, she will you may never get to it "We congratulate all the ogy from the University of serve next year (1989-90) otherwise." participants." 0 Maryland, an MPA from as his judicial clerk. • Use your own style. the University of Baltimore, Bosworth credits her "There's no best style­ and ten years' work experi­ parents-a janitor and a no particular advantage ence in the Maryland state housekeeper who sacri­ to being dry versus being Bosworth '88 criminal justice system. ficed to send their five chil­ enthusiastic." While at Stanford, she dren to parochial schools Scalia was joined on the Wins National was managing editor of the and beyond-with much of panel by Judge Dorothy W Honor StanfordJournal ofInter­ her progress. "They were Nelson of the U.S. Court of national Law (Vol. 24) and always encouraging," she Appeals, Ninth Circuit, THE nation's top award for a member ofthe student said. "Although they did and Justice Allen E. Brous­ a black female law student steering committee of the not pressure me to do well, sard ofthe California Su­ went in 1988 to Greer C. East Palo Alto Community I wanted to make them Law Project. proud." 0 preme Court....The three Bosworth of Stanford. were unammous 10 praise Then a 3L, Bosworth was of the student competitors. chosen by the NAACP Describing their decision Legal Defense and Educa­ as difficult and close, the tional Fund as winner of judges ultimately gave the its twenty-first annual Walter J. Cummings Award Constance Baker Motley for best oralist to Stuart A. Award. She (along with a Banner (3L), and the Mar­ male counterpart) was ion Rice Kirkwood Award honored May 17 in New for best team to Banner York City at a banquet dur­ and his partner, Manuel ing the LOP's yearly Civil Sanjuan DeMartino (3L). Rights Institute. The two also won the Cum­ Motley Award recipients mings Award for best brief. are selected from among The other two finalists, women in the LDF's Earl Nathan J. Hochman and Warren Legal Training Pro-

Greer Bosworth 'SS 26 Fall T988 STANFORD LAWYER Running Like the Wind

THE School has its own Olympian in PattiSue Plumer (3L), who won a place on the United States track team and ran a personal best in Seoul to qualify for the women's 3000-meter final. Battling food poisoning, the former Stanford all-Ameri­ can ultimately finished in the middle of the field - but not before her stateside fans had seen her on television going stride for stride with the world's finest. "It was more than I expected, but less than I hoped for," she later said. Plumer, who is now externing with the Public Defender's Office in San Jose, regularly swims and lifts weights, as well as running 60 miles a week. Is she looking toward Barcelona in 1992? "Definitely!" D

PattiSue Plumer (No. 592) held her own in Seoul.

Students and Faculty Engage in the Great American Pastime

SPRING weather lured Law School denizens from their offices and carrels for the annual student-fac­ ulty baseball game. Held April 22, this year's con­ test was organized by Assistant Professor Hank Greeley. Youth, it must be said, prevailed. D

PHOTOS BY NATHAN HOCHMAN "88

\ \ \ ' \ \ \ \ ~ . f{

Chuck Lawrence (right) was one of several professors (see fol­ lowing pages) to accept the challenge. Students Linda Sciuto, Jeffrey Bandman, and Marguerite Cephas (above) were snapped at a different. all-student contest. FACULTY Barbara Babcock was hon­ raised by new technologies represents the district­ ored twice this spring. The begins on page 4. California's 12th- of NOTES University of Puget Sound which Stanford is a part. gave her an LLD and made William Baxter was invited her the featured speaker at to a Euromoney Seminar in Mauro Cappelletti helped their May 15 law school Paris last May for a panel organize the Academia commencement (see page on "International Acquisi­ Europaea (European 22). And on May 20 in Palo tions and US. Competition Academy), a select inter­ Law." That month he also national association of gave a talk- "Deregulation scholars representing all or Reregulation?" -at the the natural and social sci­ opening ceremonies for ences. The new Academy the new Stanford-in-Wash­ was formally established in ington center (see p. 21). September at a meeting in Returning to the capital Cambridge, England, dur­ city in June, he participated ing which Cappelletti was in an ABA annual meeting designated a "Founding panel, "The Cutting Edge Member" and elected to ofAntitrust: Lessons from the Academy's council. Deregulation." Later that The Italian-born scholar month in Toronto, he pro­ was already a member of vided the overview for a the academies of Bel­ Fraser Institute sympo­ gium, Great Britain, Italy, sium, "Economic Com­ and France. petition and the Law." Cappelletti has been Other recent appearances spending this year at Cam­ include two panels: "New bridge as the Goodhart Directions in Antitrust," at Visiting Professor of Legal the ABA spring meeting Science. Last May he trav­ (Washington, D.C., in eled to Rio de Janeiro for March); and "Vertical the annual congress of the Arrangements," for a Prac­ Hibero-Latinamerican As­ ticing Law Institute semi­ sociation of Proceduralists, nar on Distribution and where he delivered a report, Marketing (San Francisco, "New Challenges to Pro­ in June). cedural Scholarship." And Professor Baxter, a for­ as president ofthe Interna­ mer chief ofthe US. Justice tional Association ofPro­ Department's Antitrust cedural Law, he delivered Division (1981-83), was the opening and closing singled out for praise in the speeches at its First Extra­ May 1988 issue of The ordinary Congress, "Judi­ Paul Brest Alto, the Resource Center Washingtonian. Writer cial Protection of Human for Women presented her Fred Barnes, in an article Rights at the National with an award for "leader­ titled "Reagan's Report and Transnational Level," ship achievements." Card," credited Baxter in Bologna in September. with revolutionizing anti­ Professor Cappelletti's John Barton has received a trust enforcement and latest publications include grant from the Rockefeller called him "probably the La Justicia constitucional Foundation to study the best sub-Cabinet official in (in Mexico), La respon­ regulation by developing the entire Reagan tenure." sabilidad de los jueces (Ar­ nations of biotechnology gentina), and a Japanese products. The grant pro­ Thomas Campbell was translation of his landmark vides for research in India, elected to the US. Congress 1981 volume, Access to Jus­ the Philippines, Thailand, in November and thus tice and the Welfare State. and (by way ofcontrast) began a two-year leave of Japan. An interview with absence in January. A for­ Lance Dickson is serving as Professor Barton on this mer director of the FTC chairman of the publisher's and other legal issues Bureau of Competition, he advisory committee for the

28 Fall1988 STANfORD LAWYER Index to Foreign Legal sity Law School in Macon, Law and Economics series). Periodicals. He is also a Georgia, last April. In June He and Kraakman have member of the Law Library he lectured in Europe at prepared the 1988 supple­ Editorial Board of the R.R. the Universities of Rome ment to Gilson's book, The Bowker Company. and Bologna. Law and Finance ofCor­ porate Acquisitions (Foun­ John Ely received an LLD Ronald Gilson was elected dation Press, 1986). honoris causa this spring to the American Law In­ Gilson has in addition PHOTOS BY NATHAN HOCHMAN '88 from the University of San stitute this spring. He has made several recent oral Diego Law School, where recently completed a presentations, beginning in he was also the commence­ working paper with Robert May with "Market Re­ ment speaker (see page 22). Mnookin on the legal pro­ view of Interested Transac­ Pursuing his new specialty fession, "Coming of Age in tions: The American Law in war and the Constitu­ a Corporate Law Firm: The Institute Proposal on Man­ tion, he is a Senior Re­ Implicit Contract for Asso­ agement Buyouts," at a search Fellow this fall at ciates," and, with Reinier conference sponsored by the Hoover Institution Kraakman of Harvard, the Salomon Brothers Cen­ on War, Revolution and "Delaware's Intermediate ter for the Study of Finan­ Peace. His recent writ- Standard for Defensive cial Institutions at New ings include a magazine Tactics: Is There Substance York University's Graduate piece on the Persian Gulf, to the Proportionality School ofBusiness Admin­ "Whose War Is It, Any­ Review?" (Nos. 42 and 45, istration. In September he way?" (New Republic, May respectively, in Stanford's delivered the paper for the 23,1988), and a scholarly John M. Olin Program in inaugural meeting ofthe article, "Suppose Congress Law and Economics Work­ Wanted a War Powers Act shop at the University of ThatWorked" (88 Colum­ Michigan Law School. bia Law Review 1379). Later that month he par­ Pursuing a longer-term ticipated in the opening specialty in racial discrimi­ roundtable discussion, nation, he was one of five "Perspectives on Profes­ lawyers filing the Supreme sionalism," at an American Court brief of the Ameri­ Bar Foundation Confer­ can Civil Liberties Union in ence on Professionalism, Richmond v. ].A. Croson Economics, and Economic Co., defending the consti­ Change. tutionality of a minority set-aside program for the Mark Kelman construction industry. (To those "placed in distress by the combination ofHoover and the ACLU," John sends his "condolences.")

Marc Franklin brought out a fourth edition in May of his book, The First Amend­ ment and the Fourth Estate. Last summer he co­ taught an undergradu- ate law focus course, with Visiting Professor Eric Wright '67, at Stanford's overseas campus in Ox­ ford, England.

Lawrence Friedman deliv­ ered the Vinson Memorial Lecture at Mercer Univer- Hank Greely Friendly rivals at the faculty­ Professor Gilson is spend­ Robert Gordon spent the sionalism." The legal pro­ student baseball game, April 22, ing the 1988-89 academic 1988 winter term at Oxford fession was also the subject 1988. year as a Visiting Scholar University in England as a of a Gordon article, "The at the Hoover Institution. visiting professor oflaw. Independence of Lawyers," Back in the U.S. for the published in the July Paul Goldstein participated spring term, he presented Boston University Law in two overseas meetings the annual Addison Harris Review (68:1). last summer. The first, at Lecture in April for the Ringberg Castle outside Indiana University at William B. Gould IV went Munich, was a conference Bloomington Law School. to Italy in Mayas a visiting titled "New Tendencies in His topic: "Visions of professor at the European International Protection of Order and Disorder in University Institute, where Intellectual Property." The the Regu lation of Speech, he presented some special second, in Tokyo, was the Crowds, and Sexuality." seminars. This spring he U.S./Japan Bilateral Ses­ August took him to Sydney, also sponsored an informal sion (sponsored by the Australia, where he was a Stanford seminar on Sports Keidanreu and People to keynote speaker at the an­ and Law, which involved People International), for nual conference ofthe not only lawyers and law which he chaired the com­ Australasian Universities students, but also sports­ mittee session on intellec­ Law School Association. writers, team managers, tual property law and trade Professor Gordon was and athletes. In two note­ policy. Goldstein's book, also among several Stan­ worthy August appear­ Real Estate Transactions: ford participants in the ances, he presented a paper Cases and Materials on above-mentioned Ameri­ at the ABA Labor Law Sec­ Land Transfer, Develop­ can Bar Foundation con­ tion meeting in Toronto, ment and Finance, has ference (see Gilson note), and then participated in a been issued in a revised where he and William People to People conference second edition by Founda­ Simon presented a paper in Tokyo on comparative tion Press. on "The Future of Profes- labor law.

30 Fall f988 STA FORD LAWYER Thomas Grey gave a paper, (As it turned out, the popu­ author. This spring Polinsky "The Woman's Point of 'The Uses of an Unwritten lar professor was more cel­ also presided over the inau­ View" (38 Journal ofLegal Constitution," at a June ebrated than lampooned.) gural event of the enlarged Education 39)-were part symposium on the Bicen­ John M. Olin Program in ofsymposium issues on wo­ tennial. The event was held John Henry Merryman Law and Economics men and the law. The two in Taipei for scholars from delivered a lecture-in Ital­ (see page 23). others, which appeared both Taiwan and the U.S. ian-arrhe University of in books marking the Con­ Trieste this April. The title Robert Rabin was invited stitution's Bicentennial, Gerald Gunther was called (translated): "The Interna­ to Canada in Ocrober by were "Constitutional Cele­ to New York City in May tional Traffic in Cultural the Ontario Council on brations: The View from to receive the prestigious Property." The School's Graduate Studies, to evalu­ the Margins," in Blessings Learned Hand Award of Sweitzer Professor Emer­ ate the graduate program ofLiberty: The Constitu­ the Federa: Bar Council itus is serving during at the University ofToronto tion and the Practice of (see page 23). He returned 1988-89 as president of Law School. He is currently Law (ABA-ALI Institute, East later that month as a the Stanford Faculty Club. working on a study of no­ 1988), and "Gender Equal­ panelist in the inaugural fault alternatives to the tort ity and Constitutional Tra­ program of the Stanford in Robert Mnookin recently system in environmental ditions," in America in Washington center (page journeyed to his hometown and product liability cases. Theory (Oxford University 21). July was spent in Salz­ of Kansas City, Missouri, The study is part of an Press, 1988), edited by burg, Austria, as faculty to receive a Distinguished American Law Institute Leslie Cohen Berlowitz, chair of the annual session Alumnus Award from project on tort reform. Denis Donoghue, and on American law and legal Pembroke Hill School, Louis Menand. institutions ofthe Salzburg from which he graduated Deborah Rhode had four Professor Rhode, as Seminar in American Stud­ in 1960. The University of articles published this director ofthe Institute for ies (a program begun after Alberta invited him to pre­ spring and summer. Two­ Research on Women and World War II as an "intel­ sent their Weir Memorial "Perspectives on Profes­ Gender, helped organize a lectual Marshall Plan"). Lectures, September 27 sional Women" (40 Stan­ May 4 symposium at Stan­ Gunther's session provided and 28. The next day, at the ford Law Review 1163) and ford titled "Constitutional an intensive residential pro­ University of Missouri­ gram to some fifty mid­ Kansas City, he spoke on career lawyers and judges "Barriers to Negotiated from 26 countries. The Resolution of Conflict." six-person faculty also In October at a University included U.S. Supreme of Chicago law and eco­ CourtJustice Anthony M. nomics workshop, he gave Kennedy (AB'58) and a paper on the Pennzoil­ University of Chicago Pro­ Texaco dispute. fessor Douglas Baird '79 Professor Mnookin has (a Stanford Law visiting been named to the steering professor in 1987-88). committee ofthe National Academy of Sciences' Na­ John Kaplan was elected on tional Forum on the Future May 5 to the chairmanship of Children and Families. of the Stanford University He is also busily engaged in Faculty Senate for 1988-89. establishing, with Hewlett His recent writings include Foundation support, the the article beginning on Stanford Research Center page 10 concerning the on Conflict and Negotia­ probable consequences of tion (see page 18). reversing Roe v. Wade. A. Mitchell Polinsky had Charles Lawrence allowed an article, "The Deterrent himself to be "roasted"­ Effects of Settlements and in a good cause-at a ban­ Trials," published in the quet May 9. Organized by June 1988 International the Black Law Students Review ofLaw and Eco­ Association, the event ben­ nomics. Professor Daniel efited the School's Carl B. Rubinfeld, a visiror this Spaeth Scholarship Fund. year from Berkeley, is co-

Tom McBride Celebrations: Views from study entitled "The Condi­ the Margins- Women, tions of Children in Cal­ Law and Public Policy." She ifornia," which is the first also presented a paper, comprehensive effort to "The Politics of Profession­ assess the well-being of the alism," at the American state's youngest citizens. Bar Foundation's Septem­ ber conference on the legal Charles J. Meyers, the profession. School's Dean from 1976 to 1981, died July 17 at Kenneth Scott has been his home in Denver. The studying and writing about School held a memorial the parlous state of the service in his honor Sep­ nation's commercial banks tember 23 in Stanford's and savings and loan insti­ Memorial Church. Speak­ tutions. The article begin­ ers included Dean Paul ning on page 14 gives his Brest, Professors Gerald thinking on some proposed Gunther and Howard R. regulatory solutions. Williams, Stanford Presi­ dent Emeritus Richard W Michael Wald was inter­ Lyman, alumnus A. Dan viewed by Ted Koppel on Tarlock '65 (now a profes­ the April 19 Nightline, con­ sor at liT Chicago-Kent cerning when and how Law School), and the late state agencies should be Dean's brother, Hon. James able to investigate allega­ R. Meyers ofAustin, Texas. tions of child abuse. The Over 200 people attended professor is currently serv­ the service and a subse­ ing as general editor of a quent reception at the John Kaplan School. A tribute to Dean Meyers appears in the In Memoriam section. ADVERTISEMENT Former Professor Samuel D. Thurman '39 received an honorary doctor of laws He/ping you reach degree from the University ofUtah at its 1988 com­ your career goals. mencement exercises. At Stanford for twenty years Call or write in (1942-62), he then be­ strict confidence. came dean and professor (1962-75) ofthe Utah law *Oaniel L. Hoffman school, where he continued Hoftinan as a Distinguished Profes­ Nancy I. Kaplan sor until 1986. A vigorous Legal 332 Mississippi 73, he currently teaches at the University of Califor­ Search Street, Suite A nia's Hastings College of San Francisco the Law. D California 94107 (415) 282-7200

*Graduate of Stanford Law School

32 Fall £988 STANFORD LAWYER 'M GOING to put you to The resulting discussions proved to work," Dean Brest told the be candid, penetrating, and, accord­ I members of the Board ofVisi­ ing to the professors concerned, tors. And so he did, in a packed two­ highly enlightening. day meeting that not only tackled The substantive agenda for the sec­ fundamental academic issues but ond day, Friday, May 6, began with also generated three follow-up task two reports. The first, given by Asso­ forces. ciate Dean John Gilliland and Law The Board is "an astounding Fund Director Elizabeth Lucchesi, group with vast experience and tal­ dealt with the Law School's place in ents," said Brest. "I view this meeting the University's Centennial Cam­ as an opportunity not just to tell you paign. "Every gift to the Law School about the Law School, but to ask you during the next five years contributes about our ideas and to test our plans to the $1.1 billion goal of the Uni­ against reality." versity campaign," said Gilliland. School needs designated as Centen­ ACADEMIC DIRECTIONS nial goals come to $250 million. Plans for raising this sum include The core of the agenda, explained doubling the School's personal solic­ Board Chair Richard K. Mallery '63, itation efforts, promoting reunion was an examination of three of the class giving, and increasing the over­ School's developing academic pro­ all participation rate of Law gradu­ grams: the Law and Business curric­ ates from the present, comparatively ulum; the Program in Alternative low 31 percent. Dispute Resolution; and Lawyering The second report of the morning for Social Change. The groundwork concerned the Quality of Intellectual was laid in a morning session on Life at the School-a vital and sensi­ Thursday, May 5, with presentations tive subject explored in depth during by the professors-and in one case, the past year by a group of faculty students-who were most involved and students (pages 43-45). Board in the programs (see pages 40-42). members were able to pursue this The luncheon following these ini­ and other questions with students tial presentations featured the Dean's in the small-group luncheons that annual State of the Law School followed. report. Brest opened with an over­ view of progress during his first year Thus prepared, the Visitors began CONTINUING FEEDBACK as Dean (pages 37-39). Then, in a their assigned task: to consider the thoughtful disquisition related to the academic programs described that The final segment of the working agenda of the day, he discussed the morning and share insights and sug­ agenda was the traditional "sum­ role of academic programs or tracks gestions with the School. This the mary and advisory session." Held off within the School's developing cur­ Visitors did in small groups-one the record to encourage whatMallery riculum (a subject further elaborated for each of the three programs­ called "the spirit of brainstorming," in his "From the Dean" message on chosen according to interest and it touched on a wide range ofissues. pages 2-3). including relevant faculty members. Among them: student career choices

STANFORD LAWYER Fall (988 33 BOARD OF VISITORS

(said Brest, "We can't counteract ing to commit additional time to the market forces, but we can show, and School. Some forty hands went up. have been trying to show, students In the months since, three Board what the alternatives are"); the task forces have indeed been created. quality of teaching ("I am strongly Each is devoted to an area in which committed to finding effective and Visitors expressed interest, namely nonthreatening ways to improve Dispute Resolution, Lawyering for classroom skills"); and grading and Social Change, and a long-range evaluation ("the messages are mixed, planning group called "Stanford Law with some students wanting more School in the Year 2010." (Task and some less"). forces were not formed for programs The Visitors also talked further with standing advisory groups, about the academic issues introduced namely Law and Business and the the previous day. Questions were International Center for Law and raised about the relative merits of Technology). specialized versus general education To Brest, as Dean, this is all "highly (the issue explored by Brest on pages gratifying." The School, he told the 2-3). And several Visitors advocated assembled Board, recognizes "the giving all students-not just those considerable difference between de­ participating in the proposed Law­ signing a program from an academic Dean Brest (above) and Chairman Dick yering for Social Change program­ point ofview, and understanding Mallery '63 (top) invited Visitors to greater exposure to the content and how its students are likely to fare brainstorm in sessions that included a concerns ofpublic interest law. In the when they enter practice. We wel­ lunch with students (top left). words ofone member: "Students go­ come your assistance." ing into law firms should have some the Board from 1967 to 1970, began understanding of social issues." Said HONORS AND THANKS a second term in 1985 and has served another: "Public interest law should continuously since that date on the be something that all lawyers con­ The annual coming together of the Board's Executive Committee. sider part oftheir professional life." Board offered opportunities not only The vice-chair and chair-desig­ The discussion then moved to the to work but also to publicly recog­ nate, Kendyl Monroe '60, also came Board itself-its composition (less nize some graduates who have been in for praise. Monroe, another sec­ diverse than it could be, but more especially helpful to the School. ond-term Visitor, has long carried than it once was) and function. Said This the Dean did over luncheon the Stanford Law banner in New one graduate: "You could make bet­ on Thursday. York City. ter use ofus." It was at that point that Brest began by thanking Dick The Dean then called forward something quite remarkable hap­ Mallery-a "tremendous source of the two previous Board ofVisitors pened. Chairman Mallery invited the support and encouragement"- for chairs, Charles Silverberg '55 Visitors to indicate, by raising their his sterling contributions as Board (1984-85) and Brooksley Born '64 hands, whether they would be will- chair. Mallery, who was initially on (1986-87). Both were presented with

34 Fall I988 STANFORD LAWYER Thanks were due such volunteers as Brooksley Born '64 (left), Lucinda Lee '71 (above), and Kendyl Monroe '60 (above left, with Gary Williams '76 and LaDoris Cordell '74).

moderated the discussion and subse­ quent question-and-answer period. This landmark event took place Thursday afternoon, May 5, follow­ ing that day's Board of Visitors ses­ sions (see page 23). The Board sessions Friday were followed by another public program, the annual Marion Rice Kirkwood Moot Court Competition finals. Always fascinating, the mock appel­ late court arguments were this year presided over by Associate Justice engraved mantle clocks and certifi­ are attempting giant steps forward, Antonin Scalia of the U.S. Supreme cates expressing the School's "esteem the Dean said simply, "Thanks Court, withJudge DorothyW. Nelson and gratitude." (The 1985-86 Board in advance." of the Ninth Circuit U.S. Court chair, Judge William A. Norris '54, of Appeals and Justice Allen E. received similar tokens during a SPECIAL EVENTS Broussard of the California Supreme subsequent trip to Los Angeles by Court as co-panelists (page 26). the Dean.) Visitors at the two-day meeting were The third and last of the events­ Lucinda Lee '71, the president of also included in three other events the annual banquet ofthe Board of the Law Fund in 1987 and 1988, was sponsored by the School. The first, a Visitors-was made memorable by a also honored with a clock. Under Lee's public program inaugurating the distinguished guest speaker, Justice leadership, the Law Fund reached its newly namedJohn M. Olin Program Scalia. Dean Brest introduced the highest level ever. in Law and Economics, featured Justice and welcomed him back to Recognition of a different sort Nobel prize-winning economists the School. A visiting professor in went to current volunteer leaders Kenneth J. Arrow of Stanford Univer­ 1980-81, Scalia had been, the Dean Stephen Bauman '59, the president of sity and Milton Friedman of both the said, "a very popular teacher and a the Law Fund, and Guy Blase '58, Hoover Institution and the Univer­ generous and lovely colleague." De­ chair of the School's Keystone Pro­ sity of Chicago. Their subject, appro­ claring after-dinner speeches to be gram (personal solicitation effort). priately, was "The Relationship "barbarous," Scalia delivered the Grateful for their service during a Between Law and Economics." Olin very opposite: an elegant Bicenten­ time when the School and University Program Chair A. Mitchell Polinsky nial discourse on the Constitution

STANFORD LAWYER Fall [988 35 BOARD OF VISITORS

("the substance of what makes us community," he said. "We the alumni THE AGENDA one people") and its genesis ("in a are the keepers of tradition-tradi­ four-month seminar consisting of the tions ofexcellence and of service, Thursday, May 5 most erudite and politically experi­ particularly public service. We help Welcome by Richard K. Mallery, enced individuals in the nation"). provide continuity; we span the Chair The closing remarks of the eve­ decades and constitute a reservoir of Developing Academic Programs: ning-and, with it, the 1988 Board of talent and energy that can be utilized Presentations Visitors meeting-were offered by by the School. Thank you for coming "Law and Business Curriculum" Board Chair Dick Mallery. "The al­ so far, for working so hard, and for Professor Thomas]. Campbell umni, together with the faculty and caring about the School." 0 Professor Ronald]. Gilson the students of the School, form a "Program in Alternative Dispute Resolution" Robert H. Mnookin, Adelbert H. Sweet Professor of Law "Curriculum in Law for the Disadvantaged" Gerald P. Lopez, Kenneth and Harle Montgomery Pro­ fessor of Pu blic Interest Law The State ofthe Law School Paul Brest, Richard E. Lang Professor and Dean Developing Academic Programs: Discussion Inauguration of the John M. Olin Program in Law and Economics (see page 23) Reception and dinner Justice Scalia appeared both robed and in mufti (left). Nobel economist Ken­ Friday, May 6 neth Arrow (above, with Professor Report on Centennial Plans William Baxter) helped inaugurate John Gilliland, Associate Dean the Olin Law and Economics Program. for Development Elizabeth Lucchesi, Director of the Law Fund Quality ofIntellectual Life: Task Force Report Henry T. Greely, Associate Professor Sharon Buccino (lL) Gillian Hadfield (3L and PhD '85) Lunch with students Summary and Advisory Session Richard K. Mallery, Chair, presiding Marion Rice Kirkwood Moot Court Competition: Final Arguments (see page 26) Cocktails and Dinner Dance Remarks by Antonin Scalia, AssociateJustice of the U.S. Supreme Court

36 Fall 1988 STANFORD LAWYER STATE OF THE SCHOOL

Paul Brest are at least twenty-four years old, and Payton '68: "Law schools have been Richard E. Lang Professor and Dean 14 are over thirty-a reflection of saying the reason we don't hire more "the School's policy of looking, not minority faculty is that the pool of HIS is an extraordinarily for students who are older per se, but minority law teachers is too small. exciting time to be at the for students who have had some Don't you think we have a respon­ T Law School," began the experience since college." sibility to do something about it?" Dean. "We are continuing to improve The number of applicants for ad­ These two doctoral candidates, said the core curriculum that has placed mission this year was unprecedented: Brest, represent a first step by the us among the top law schools in the 4800 compared to 3800 in 1987­ School to respond to Payton's United States. At the same time we for 170 places. The Dean noted that challenge. are working on innovative curricular similar surges have occurred at other developments to teach our students top law schools. Explanations for the CAREER CHOICES better to serve their clients and the phenomenon include the stock mar­ society at large." Noting that three of ket fall and scandals involving invest­ A great majority of the School's these developing programs were the ment firms, both perhaps making graduates (discounting the year or focus of the Board of Visitors meet­ business careers seem relatively less two that many spend in clerkships) ing (see pages 40-42), he reported on attractive than law. Another theory is continue to go into private practice, a number ofother matters of interest. the influence of the popular television reported the Dean. Perhaps 8 to 10 series, LA Law. Whatever the reason, percent choose government or public STUDENTS observed the Dean, "we have had a interest work, and a small but in­ wonderful range of applicants from creasing number go into teaching. The Class of1990, which entered last which to choose our next entering Generally, though, "the largest num­ fall, contains 97 men and 71 women; class." ber ofour students are going to work 34 of these students are members of Also entering this fall are the first in large firms in big cities." minority groups, and 33 have earned two candidates in the expanded JSD "Is this a problem?" he asked, not­ advanced degrees in non-law fields. program for aspiring law teachers ing that student autonomy in their Some 72 colleges or universities (Spring 1988, pages 2-3). One is career choices is an important Stan­ granted the students' undergraduate Black-Asian, one Hispanic, and both ford tradition. The central question degrees. And geographically, 36 are female. The Dean was pleased to should be, "Are our graduates in fact states, 1 territory, and 5 foreign coun­ tell the Board that this new graduate doing what they really want to do?" tries are represented. The Dean called program grew out of a comment at For many the answer is, "Yes." How­ particular attention to the fact that the 1987 Board of Visitors meeting ever, said Brest, "we have a sense that almost half the class (88 out of 168) by Michigan Professor Sallyanne many others are not all that happy in large firms in large cities, and that after four or five years of practice, quite a few graduates are looking to smaller firms and perhaps thinking about locations outside of Los An­ geles, Washington, New York, and San Francisco." The Dean hopes to begin a longitudinal study ofgradu­ ates five or ten years into their careers, in order "to understand better not only what kinds of jobs they have, but also how content they are." Brest also reported that he and the deans ofseveral other law schools have been discussing the possibility of increasing the amount of attention paid by their placement offices to sec-

"Only a school that is strong and self­ confident could be this ambitious;' said the Dean.

STANFORD LAWYER Fall [988 37 BOARD OF VISITORS

Utah Dean Edward Spurgeon '64, his wife, and DeanJack Friedenthal of George Washington took part(above), as did Anne Bingaman '68, Rod Hills '55 (right), and Richard Anderman '69 (top right, with Dean Brest). and placements. "Perhaps we should provide more service to graduates who are dissatisfied with their pres­ ent jobs and want to relocate." In the meantime, he said, the School will continue to offer current students as much information as pos­ sible about a range of career options, including smaller firms in smaller praised Weisberg, a dedicated teacher cess of cross-pollination." cities and government and public in­ of criminal and commercial law, for On the plus side, continued the terest jobs. In addition, students his "sheer good citizenship" in taking Dean, the faculty added two mem­ can explore different opportunities on the administrative job. bers this year: Janet Cooper, from for practice through summer jobs, The second person-a relatively Morrison & Foerster in San Fran­ externships, the East Palo Alto new name to the Visitors-was cisco; and Barbara Fried, from Paul, Community Law Project, and other Lance Dickson, then in his first year Weiss, Rifkind, Wharton & Garrison hands-on experiences. as the School's Law Librarian (Fall in New York (Fall 1987, pages 40-42). 1987, pages 40-41). Dickson had been Further efforts to strengthen the pri­ FACULTY enthusiastically recommended by vate law area are in work for 1988/89. the search committee charged with Brest also revealed that Joseph The faculty currently consists of43 finding a successor to retiring Law Grundfest '78 will join the Stanford members, generously augmented by Librarian MyronJacobstein. "Time Law faculty when he completes his visitors and lecturers. "It's a produc­ has proved that enthusiasm justi­ term as a commissioner of the Se­ tive and nationally renowned fac­ fied," said the Dean. "The library is curities and Exchange Commission. ulty," declared the Dean. "It is also alive, well, and dynamic." diverse - in race, in sex, in interests The Dean then noted two upcom­ CURRICULUM and approaches to law, and in ideolo­ ing departures: Professor Robert gies." Despite that, he emphasized, Ellickson, who is moving back to his The School's curriculum is "rich," "it continues to work together in har­ alma mater, Yale; and former Associ­ said the Dean, with a range of mony, and is not factionalized." ate Dean Jack Friedenthal, who has courses running alphabetically from Dean Brest mentioned two par­ been named Dean of George Wash­ Accounting to Water Law in the fall; ticular individuals with school-wide ington University Law Center. "We and from Advocacy to Tort Reform in responsibilities. The first-a familiar never like to lose significant scholars the spring. "Depth, however, is as im­ person in a new role-is Professor and teachers, but we take as much portant as breadth"- hence the cur­ Robert Weisberg '79, who is serving from other schools as we give," said rent effort to develop programs with as Associate Dean for Academic Brest. Movement among law schools course sequences and clusters. Three Affairs (Fall 1987, page 38). Brest can perhaps be considered as "a pro- of the programs-Law and Business,

38 Fall I988 STANFORD LAWYER Alternative Dispute Resolution, and identified some valid concerns for addition, he said, released time will Lawyering for Social Change- are the future and had warned that the be needed for faculty involved in the subject of discussion at this Board School's continued excellence de­ creating curricula for the above­ ofVisitors meeting (pages 40-42). pends importantly on maintaining mentioned developing programs. The Dean also called the Visitors' financial strength. The ABA reviewers also evaluated attention to two other programs of Faculty salaries were identified as the School's Crown Law Library, not­ significance: Law and Economics, one potential problem. Among top ing that it is extraordinarily well which is making good progress law schools, Stanford is only twelfth managed, but too small for a school thanks in part to a grant from the in the level of faculty compensation. ofthis quality. "Size isn't everything," John M. Olin Foundation (Fall 1987, "We have not yet failed to get a fac­ said Brest, "but there are times when pages 43, 47); and Technology and ulty member or lost a faculty member faculty need books that have to be Law, in which Professor John Barton because ofsalary," said the Dean, borrowed from a long distance." '68 is taking the lead. Brest noted "but we feel in a defensive and vul­ Another area in which the School that the technology effort, like the nerable position." must work to stay competitive is Law and Business program, will have The School is also not competitive financial aid-particularly if it hopes a significant research component and in the research leaves granted to its to maintain a diverse student body. an international focus. (For more on faculty. Michigan, Yale, and a num­ "We now have more older students this program, see the interview with ber ofother law schools now offer who are independent of their parents Barton beginning on page 4.) mid-sabbatical leave, so faculty can and more who have children depend­ Dean Brest then discussed some be relieved of teaching responsibili­ ing on them," observed the Dean. general issues relating to course ties every third or fourth year, rather Fortunately, he said, the University sequencing. He said that these pro­ than waiting seven years, to pursue regards the Law School as "one grams were not intended to narrow their research and writing. Dean of Stanford's jewels" and is under­ the educational experience. Rather, Brest noted that although Stanford standing ofits needs. Several ofthe "Our hope is to improve the second­ Law School provides junior faculty School's objectives have been given and third-year curriculum by making with one semester off to concentrate Centennial priority, specifically three it more efficient, more engaging, and on scholarship, it lacks the resources endowed professorships, operational more valuable. We want to build in to increase faculty leave generally. In support for the East Palo Alto Com­ more structure and coherence." (See munity Law Project, and substantial "From the Dean" on pages 2-3.) new financial aid resources. However, The effort to develop advanced the Dean pointed out that Centennial curricula is, Brest believes, an impor­ goal status does not in itself ensure tant one- in fact, his highest priority. that the School will get the desired "If, by the end ofmy term as Dean, funding. "The development work is we have made substantial progress in essentially our responsibility. The this area, I and my Law School col­ University is notgoing to do it for us." leagues will have a great sense of Dean Brest closed on a person- achievement. And what we will have al note, saying that he had "really done may be a model for others." enjoyed" his first year as Dean. The He concluded his remarks on the most unfamiliar part ofthe job­ curriculum with the observation: meeting and working with alumni! "Only a school that is strong and self­ ae-has turned out to be a genuine confident could be this ambitious. pleasure. In addition, Brest has found We are building on strength." the faculty and staff to be strong and supportive and the student body ACCREDITATION REVIEW "wonderfully talented and very de­ manding." He noted rather ruefully The ABA accreditation committee that student feedback includes few that visited the School in 1987 con­ pats on the back-at least in the stu­ cluded that Stanford's reputation as dent newspaper. But, he said, "That one ofthe nation's top law schools goes with the job. Ifyou can avoid was well deserved - "hardly surpris­ being defensive and distinguish the ing," said the Dean. But Brest also valid criticisms from the rhetoric, reported that the committee had you can learn a lot." D

STANFORD LAWYER Fall I988 39 INNOVATIVE ACADEMIC PROGRAMS

NUMBER OF initiatives program will embrace three main com­ it begins in the spring term of the first are under way at the Law ponents: curricular innovation, re­ year with foundation courses in Eco­ A School to develop programs search, and practitioner involvement. nomics (primarily microeconomics), ofcurriculum and research in subject The research component, which Accounting, and Finance. areas important to lawyers and the is still being designed, will focus, Thus prepared, students may larger society, said Dean Brest. All are Gilson said, on the central question choose during their second and third innovative in nature and thus hold of "private ordering": how business­ years from a broad array of upper­ promise for improving legal training men and -women structure their level courses, including Antitrust, not only at Stanford but at law transactions independent of regula­ Banking, Bankruptcy, Business schools generally, he continued. Of tion. Only after understanding pri­ Associations, Business Planning, these programs, three were selected vate ordering, he explained, can we Commercial Law, Copyright Law, for discussion at the 1988 Board of decide how the legal and regulatory Corporate Acquisitions, Econom- Visitors meeting. I systems might be helpful. ics of Legal Rules and Institutions, Descriptions of these programs, as The practitioner component is and so on through the alphabet. An provided by the professors directing expected to take two forms: an ongo­ even more sophisticated group of their development, follow. Not here­ ing seminar including experienced courses, such as Advanced Antitrust, in reported - but much valued by attorneys and business persons; and Advanced Corporate Finance, and so these same professors-were the occasional public lectures by eminent on, then also becomes accessible. comments and observations made practitioners. "Feedback from mem­ "The building blocks are firmly in by Visitors in discussion sessions bers ofthe practicing bar is critical," place," said Campbell. "We can now held for that purpose later in the Gilson observed. "We need to tell say to students: 'Ifyou want to be a same day and during the summary them what we're doing, ask if it makes business lawyer, we've got the course and advisory session the next day. sense, and listen to what they say." sequence to do so.''' The most fully realized of the Of the Law and Business Program LAW AND BUSINESS three components-the Law and as a whole, Campbell concluded: Business curriculum-offers training "The Dean has made this one of his Professors RonaldJ Gilson and approaching that of a JD/MBA, but highest priorities, so we expect soon Thomas J Campbell within the three years of law school. to have the most excitingJD-Biz pro­ As described by Professor Campbell, gram in the nation." "We have been dealing with a Shet­ land pony, when there is a large stallion loose in the world," said Professor Gilson, about the way law schools have traditionally ap­ proached the teaching of law and business. Taking as an example the standard course in Securities Regula­ tion, he said: "A syllabus that focuses on the sale ofsecurities to U.S. citizens is not particularly relevant in the era of24-hourtrading around the globe." As co-chairs ofthe School's emerging Program in Law and Business, Pro­ fessors Gilson and Campbell have been working on what amounts to a revolution in the study and teaching of business law (Stanford Lawyer, Spring 1988, pages 4ff). In brief, the

Presentations by Professors Gilson, Campbell, Mnookin (left to right) and Lopez (next page) laid the groundwork for discussion of three new course concentrations.

40 Fall/988 STANFORD LAWYER ALTERNATIVE DISPUTE It follows that negotiation is a crit­ sion scientist Robert B.Wilson; and RESOLUTION icallawyering skill. While acknowl­ psychologists Amos Tversky and Lee edging that the "pas de deux" of Ross. The initial themes of the semi­ Robert H. Mnookin negotiation is an art, Mnookin said it nar, according to Mnookin, have Adelbert H. Sweet Professor ofLaw is also a science. "The skills involved been theories ofnegotiation and risk. are teachable; one can improve one's Mnookin then told the Visitors "Most disputes do not require performance." about two recent developments: the adjudication," Professor Mnookin There is much lawyers can learn establishment of an annual Richard pointed out. And yet until recent­ from other disciplines, he said-par­ S. Goldsmith Award for student work ly little attention was paid in law ticularly economics, psychology, and on dispute resolution (Spring 1988, schools to negotiation, arbitration, anthropology. One example, from page 39); and the creation, with and other alternatives to litigation. economic theory, is the concept of Hewlett Foundation support, of a Mnookin, who chairs the School's Pareto optimality. Negotiations have Stanford Center on Conflict and efforts in this field, is working to been known to fail not because the Negotiation with Mnookin as its make Stanford an important center parties could not come to an agree­ director (see pages 18-19). for research and teaching about ment, but because the settlement, Stanford is thus "in the forefront dispute resolution. when reached, served the interests of of alternative dispute resolution," "The fact that most disputes don't the parties involved less effectively concluded Mnookin, with progress need adjudication doesn't mean that than possible alternatives, i.e. when being made in both theory and prac­ there is not a role for law and the the settlement is "Pareto crummy." A tice. He closed with a statement legal system," he continued. On the notorious example: the recent Pennz­ ofthe program's underlying goal: contrary, lawyers playa central role. oil-Texaco dispute, which ended "Training our students to be more In addition (and this is a focus of up in bankruptcy for one party effective as lawyers and citizens, and his own research) what happens or and avoidable tax costs for the other. to participate constructively in the would be expected to happen in The concepts and methods of resolution of disputes." court affects how people behave out resolving disputes outside of court of court-a phenomenon Mnookin are being increasingly incorporated LAWYERING FOR SOCIAL calls "bargaining in the shadow of into many of the School's courses, CHANGE the law." including, in the first year, Contracts, Civil Procedure, and the elective in Gerald P. Lopez Lawyering Process (an innovative, Kenneth and Harle Montgomery team-taught course now taken by Professor ofPublic Interest Law about a third of aU Stanford Law students). "In the law, we commonly assume The most intensive training, how­ that people are essentially generic or ever, is offered in Mnookin's upper­ fungible-that differences among level offering in Dispute Settlement, them are not important," said Pro­ in which students are exposed to a fessor Lopez. "This may be an at­ range ofsocial theories and clinical tractive idea when we are talking simulations of negotiation and me­ principles-say, equal protection," he diation. The course, which is very continued. "But when we are talking "labor intensive," is being co-taught about the actual practice of law, and with Gary Friedman, a prominent how best to help a group pursue Bay Area mediator. equal protection, the assumption Another and highly significant of equivalency among clients effort is on the scholarly, theoretical proves false." front: the Interdisciplinary Seminar Nowhere is this more true, Lopez on Decision, Conflict and Risk, which said, than in legal practice on behalf is taught in cooperation with the of relatively disempowered individ­ Economics and Psychology Depart­ uals or groups - "people subordi­ ments and with the Graduate School nated politically and socially by ofBusiness. The professors involved, reason of poverty, race or ethnicity, in addition to Mnookin, are Nobel gender, sexual orientation, age, or economist Kenneth Arrow, GSB deci- disability." Lawyers who wish to

STANFORD l.AWYER fal/1988 41 BOARD OF VISITORS

Jerry Lopez (above) and Thomas Elke ence." The content would be drawn in Teaching Self-Help and Lay Law­ '52 (right) advocated special courses in from (1) political, social, and eco­ yering, the Poverty Law clinic and law for the disadvantaged. nomic theory on how and why some seminar currently taught by William groups are disadvantaged; (2) litera­ Simon and Santa Clara Professor Eric work with such clients need different ture-autobiography, fiction, oral Wright '67, and other such innovative skills, knowledge, and understanding testimony, drama, poetry, and so efforts. The rich clinical resources of than lawyers serving more privileged forth -expressing "the experience the East Palo Alto Community Law clients, he said. It is not enough to ofthat form of living and life"; and Project will also be invaluable. learn the content of, say, the laws (3) observations by people in allied The developing curriculum is, relating to entitlements, immigra­ efforts, such as social workers, orga­ nonetheless, "a fragile enterprise, re­ tion, and discrimination. One must nizers, and lay people. quiring an immense amount of us," also, Lopez believes, arrive at some Electives in the second and third said Lopez, who last May became the understanding of "the role and years would consist oftwo kinds of School's Montgomery Professor in meaning oflaw, lawyering, and legal courses. The first would provide core Public Interest Law (see pages 19-20). systems in their lives." literacy in subjects such as civil rights From the faculty there is the time It is here, Lopez believes, that tra­ law, housing, welfare, labor law, involved in developing new courses ditionallegal curricula and modes small business, nonprofit corpora­ and modes of teaching. Students, in of teaching fall down. He has been tions, etc. - but not taught in the tra­ turn, would be challenged "to par­ meeting with other law teachers, stu­ ditional manner. "Using class time to ticipate more strongly in their own dents, and community members to transmit textbook information is teaching." The School, alumni/ae, explore the question: What would it wasteful," Lopez asserted. "We can and other donors would be called take to create a meaningful and ef­ devise much finer self-teaching on to provide money for an area in fective curriculum in Lawyering for instruments" for that purpose. which there has traditionally been Social Change? The other kind of upper-division little funding. Finally, said Lopez, The curriculum proposed by the course-what Lopez called "the both the practicing Bar and the subor­ group would begin in the second heart" of the proposed curriculum­ dinated themselves would need "to semester of the first year with a would consist of coordinated work­ open up-to consider that academics "fairly radical restructuring" of the shops on either or both oftwo things: may actually have something to offer existing elective in Lawyering Pro­ "elements of social life" (for example, them." D cess. This course-while good in that housing, life of a poor family); and it introduces students to interview­ lawyering skills, including "what it ing, counseling, and negotiation­ means to collaborate with someone offers "no sense ofwho you are significantly different from you." working with," he said. In developing this proposed new 1 Information about other academic pro­ A second and completely new curriculum in Lawyering for Social grams has been, or will soon be, provided foundational course, also to be Change, Lopez and his colleagues elsewhere. These include the International offered in spring of the first year, will draw on insights gained in Bill Center for Law and Technology (see pages would deal with "subordination­ Ong Hing's Immigration Law policy 4££) and the John M. Olin Program in Law traditions of thought and experi- and clinic courses, Lopez's Workshop and Economics (Fall 1987, pages 43, 47).

42 Fall I988 STANFORD LAWYER QUALITY OF INTELLECTUAL LIFE

Henry T Greely Sharon Buccino (1L), Gillian Had­ naming classroom atmosphere, cur­ Associate Professor ofLaw field (3L and PhD '85), Robert Mur­ riculum, teaching approaches, the ray (2L),]effrey Schneider (2L), and grading system, and the extent of Sharon Buccino (lL) William Tate (3L). Additional stu­ out-of-class discussions on law and Gillian Hadfield (3L and PhD '85) dent input was solicited through a public affairs. detailed questionnaire distributed to The questionnaire was both com­ HE TERM 'quality of intel­ every member of the student body. prehensive and long-twelve pages, lectuallife' encompasses Greely noted that, though faculty requiring about two hours to com­ T many different things," be­ and student task force members had plete. One-quarter of the student gan Professor Greely. For example, begun with different ideas, they ulti­ body (126 students) voluntarily "whether students are well prepared mately reached a surprisingly high returned it. A comparison of their for class discussions, whether they level ofconsensus about both "what responses with those of 26 students are doing enough scholarly work, things we were worried about and from a randomly selected control and whether they are talking about what the Law School might do group indicated that there were no law in the Law Lounge." to improve them." Generally, how­ important differences between vol­ Professors tend to be "people who ever, the sense was that "the situa­ unteers and controls. are captured by issues," he contin­ tion is good, but can and should The survey revealed certain com­ ued. "Law school excited us-was be improved." mon concerns among students, re­ one ofthe great intellectual experi­ A report with tentative recommen­ ported Buccino. These were a "clear ences ofour lives." Greely and other dations was released by the Task dissatisfaction with the Law Lounge faculty members have sensed, how­ Force on May 4,1988 (the day before as a place to meet and talk before ever, that this is not the case with the Board ofVisitors meeting). "Our and after class"; "dissatisfaction with many students, that "students are not interest today," Greely told the Visi­ feedback," especially in courses as excited about the law as we would tors, "is in getting your questions and where the grade depends only on the like them to be." comments." A School-wide meeting final exam; and "dissatisfaction with Seeking to raise the level of student to solicit student reactions would the curriculum," specifically, the dif­ engagement, Dean Brest in October take place the following Monday. ficulty for a student in developing a 1987 created a Task Force on the unified individual curriculum. Quality ofIntellectual Life at Stan­ THE SURVEY Buccino also noted a concern ford Law School. The group, which among some students that "atmos­ Brest himself chaired, included Pro­ Sharon Buccino, a first-year student phere both in and out ofthe class­ fessors Greely, Robert Ellickson, on the Task Force, described the sur­ room" may reflect intolerance of Gerald Lopez, and five students: vey conducted by the group to assess certain ideas or political philoso­ student attitudes and experiences phies. There were students, she said, The findings of a nine-member task related to intellectual life at the Law "who expressed an inhibition about force were presented by Buccino, Greely, School. "We had to investigate a very being able to express a view and inter­ and Hadfield (left to right). broad range of issues," she said, act with different views."

STANFORD LAWYER Fall I988 43 BOARD OF VISITORS

Task Force on the Quality of Intellectual Life RECOMMENDATIONS

Ambiance Extracurricular Intellectual Life

• Any proposals for improving the quality ofintellec­ • The student lounge should be improved to make tuallife at the Law School should give weight to the it a more congenial place for discussion; the Library importance ofmaintaining its informal, friendly, should consider how to expand and improve com­ relaxed, and relatively non-competitive atmosphere. mon reading and meeting areas; the administration and student organizations should consider ways to Curriculum encourage use ofthe meeting areas at the Taper Center. • The School should supplement the Bulletin with written information about the advanced curriculum, • The School should foster more extracurricular and should hold more helpful public meetings to ass­ intellectual interchange between faculty and students, ist students in choosing advanced courses. including brown-bag lunches, lectures, and panels.

• The School should consider adopting a faculty • First-year instructors should encourage students to advisor system, under which each student would con­ form study groups. fer with a faculty member at least once a semester. Placement • The School should expand and coordinate the offerings in business law and should consider expand­ • The Career Services Office should provide students ing offerings in litigation. with much better information about alternatives to large-firm practice. Teaching Diversity and Tolerance • The School should give considerable weight to teaching in hiring and promoting faculty, and should • Our final recommendation, and one that we regard structure compensation and other incentives to en­ as crucial to the School's well-being, is that all mem­ courage and reward good teaching. bers ofthe Law School community should work to create an atmosphere oftolerance for our diverse • The faculty should regularly discuss methods of backgrounds, ways of being, experiences, goals, and teaching and should work systematically to improve beliefs. We should strive to maintain an environment their teaching. Earlier this year, the faculty held sev­ in which people are accepted for what they are, and eral teaching workshops. We recommend that these feel safe to explore and express the broadest range of be conducted regularly, and that the faculty and ideas-including ideas that others may find unfa­ administration consider additional means ofhelp­ miliar, threatening, wrong, or even obnoxious. ing faculty to improve their teaching. This requires a willingness to eschew simplifying rhetoric and to engage in dialogue that shows respect Evaluation and Feedback for the views of those with whom we disagree. It requires active collaboration in protecting the expres­ • Faculty members should provide prompt and ade­ sion ofviews that are not considered "politically cor­ quate feedback on exams. rect." We specifically recommend that the leadership ofa broad spectrum ofstudent organizations begin • Faculty members should seriously consider alterna­ conferring regularly with each other and with mem­ tives to making the grade in a course depend only on bers of the administration and faculty toward these a final examination. ends.

44 Fall1988 STANFORD LAWYER ------

IMPACT

Gillian Hadfield, a third-year student member of the Task Force, discussed some of the outcomes of the group's work, the first being "a perception of the problems that is quite far ranging. For example, it had not been gener­ ally realized that some students felt "silenced" by other students. Bringing such issues out in the open-particularly the need for tol­ erance and understanding of politi­ cally diverse views-has "raised the consciousness of students and fac­ ulty," Hadfield said. This resulted just yesterday (May 3) in a school­ wide panel on the perceived silencing ofconservatives. classmen may arise from the clerk­ Hadfield also said that the Task ship experience of the first summer, Force may have helped "to focus fac­ suggested one Visitor. "Perhaps law ulty attention on the issue of quality firms aren't nurturing interest in aca­ of teaching." While teaching at the demics." If so, he said, the problem School is generally considered to be may be beyond the power of law good, she observed, "more could schools to solve. be done to make discussions engag­ Another Visitor had heard student ing and interesting." Hadfield, who complaints of being booed and hissed has completed doctoral studies in when speaking up in class. "We the Economics Department, men­ believe that is completely unaccept­ tioned the desirability of "alternatives able, intolerable behavior," declared to the Socratic method and single­ Greely. Faculty members can help by exam approach." demanding that students show She then reviewed the specific rec­ respect for classmates with different ommendations of the Task Force, as 0plI1l0ns. contained in their report of May 4 Buccino reported that "most peo­ (see box). Readers interested in the ple are positive about the atmosphere full report may request a copy from in the classroom but striving towards Sharon Doyle, Assistant to the Dean, an ideal." The previous day's student Stanford Law School, Stanford, CA panel on silencing was, she said, very 94305-8610. encouraging, in that "there were people of all different attitudes who DISCUSSION realized the value of diverse views and wanted their classroom experi­ In the ensuing discussion, Visitors ence to be exciting and vibrant." Hugh McMullen '71 (above) and asked about the honor code (still On this note, the session on the Charles Silverberg '55 (top, with Had­ effective), student evaluation of quality of intellectual life ended- but field) were among the many Visitors teachers (published regularly), and not the dialogue, which extended with comments and suggestions about practitioners in the classroom (a fre­ into the student/Visitor lunch meet­ student life. quent occurrence). Extracurricular ings and on into the afternoon sum­ activities-when law-related and mary and advisory session, where mentally challenging-were also Dean Brest pledged that implement­ praised as a means of constructive ing the recommendations of the Task engagement. Force would be among his highest Disengagement among upper- priorities. 0

STANFORD LAWYER Fall 1988 45 BOARD OF VISITORS, 1987-88

EXECUTIVE COMMITTEE MEMBERS Allan E. Charles '27 San Francisco, California Richard K. Mallery '63 Lionel M. Allan '68 Chair SanJose, California Melva D. Christian '77 Phoenix, Arizona Houston, Texas William H. Allen'56 Kendyl K. Monroe '60 Washington, D.C. Ernest M. Clark,Jr., AB '41 Vice-Chair (Loyola, LLB '49) New York, New York Richard A. Anderman '69 Carpinteria, California New York, New York Stephen A. Bauman '59 Hon. LaDoris H. Cordell '74 Los Angeles, California ]. Arnoldo Beltran '77 SanJose, California Los Angeles, California Brooksley E. Born '64 James R Crafts, Jr. '53 Washington, D.C. Anne K. Bingaman '68 San Francisco, California Washington, D.C. James C. Gaither '64 Sharon Lee Criswell '72 San Francisco, California Guy Blase '58 Dallas, Texas Palo Alto, California James M. Galbraith '67 Donald W. Crocker'58 San Marino, California Larry C. Boyd '77 Los Angeles, California Newport Beach, California RoderickM. Hills '55 James S. Crown '80 Washington, D.C. Jerome 1. Braun '53 Chicago, Illinois San Francisco, California Albert]' Horn '51 Gordon K. Davidson '74 Burlingame, California Merlin W. Call'53 Palo Alto, California Los Angeles, California William R Kroener III, JD/MBA '71 Georgios D. Dikeou '64 Washington, D.C. Peter M. Cannon,JD/MBA '82 Denver, Colorado New York, New York Lucinda Lee '71 Heidi B. Duerbeck '72 San Francisco, California R. Frederick Caspersen '71 New York, New York San Francisco, California Prof. Sallyanne Payton '68 Ann Arbor, Michigan

Miles L. Rubin '52 New York, New York

Clyde E. Tritt '49 Los Angeles, California

Kenneth and Harle Montgomery (shown here with Dean Brest) received a round ofapplause for their continuing and enlightened philanthropy on behalf ofpublic interest law. (See page 20.)

46 Fall [988 STANFORD LAWYER The 102 current members include solo practitioner Kenton Granger '62 of Kansas (right), ACLU attorney Gary Williams '76 of Los Angeles (top right), and law firm partner Sandra Weiksner '69 ofNew York (above).

David H. Eaton '61 Phoenix, Arizona

Hon. Norbert Ehrenfreund '59 San Diego, California

Thomas WElke '52 Palo Alto, California

Lewis L. Fenton'50 Monterey, California Paul M. Ginsburg '68 Kay V. Gustafson '77 Clarence]. Ferrari, Jr. '59 San Francisco, California Irvine, California San Jose, California Bruce L. Gitelson '64 James W Hamilton '59 Ana Louise Figueroa '83 SanJose, California Costa Mesa, California Los Angeles, California Allan S. Glikbarg '54 Hon. Pauline Davis Hanson '46 John E. Finney '68 Los Angeles, California Fresno, California Honolulu, Hawaii David B. Gold Robert L. Harmon '55 David L. Fletcher '58 (Hastings,JD '51) Tiburon, California Palo Alto, California San Francisco, California Edwin A. Heafey,Jr. '55 Morton L. W Friedman '56 Jerome L. Goldberg '57 Oakland, California Sacramento, California Los Angeles, California Henry W Hoagland, Jr. '37 Maurice D. L. Fuller, Jr. '55 Joseph H. Gordon, Jr. '64 Kennebunkport, Maine San Francisco, California Tacoma, Washington Sarah K. Hofstadter '78 James M. Gansinger '70 Kenton C. Granger '62 San Francisco, California Los Angeles, California Overland Park, Kansas Edwin E. Huddleson, Jr., AB '35 Prof. Robert Garcia '78 Robert N. Grant, JD/MBA '72 (Harvard, LLB '38) Los Angeles, California Palo Alto, California San Francisco, California

STANFORD LAWYER Fall I988 47 BOARD OF VISITORS

George D. Jagels, AB '29 (Harvard, LLB '32) San Marino, California

C. BradfordJeffries '55 San Francisco, California

Russell L. Johnson'58 Los Angeles, California

Tom Killefer, AB '38 (Harvard,JD '46) Portola Valley, California

StuartL. Klein, JD/MBA '83 Mountain View, California

Louise A. LaMothe '71 Susan H. Nycum Marshall L. Small '51 Los Angeles, California (Duquesne, JD '60) San Francisco, California Palo Alto, California David F. Levi '80 Christina A. Snyder '72 Sacramento, California Richard F. Outcault,Jr. '50 Los Angeles, California Los Angeles, California John P. Levin '73 Franklin F. Spears San Francisco, California Daryl H. Pearson '49 Dallas, Texas Stanford, California Michael T. Lyon '67 Dean Edward D. Spurgeon '64 Chicago, Illinois Austin H. Peck,Jr. '38 Salt Lake City, Utah Los Angeles, California Frank L. Mallory '47 Isaac Stein, JD/MBA '72 Newport Beach, California Colin M. Peters '47 Palo Alto, California Palo Alto, California Paul N. McCloskey, Jr. '53 Vincent M. Von der Ahe '71 Palo Nto, California Hon. Pamela Ann Rymer '64 Costa Mesa, California Los Angeles, California John R. McDonough Sandra S. Weiksner '69 (Columbia, LLB '46) John J. 53bl '76 New York, ew York Los Angeles, California Chi(ago, Illinois Charles Rice Wichman '52 Hugh S. McMullen '71 Herbert Sandler Honolulu, Hawaii Los Angeles, California (Columbia,JD '54) Oakland, California Gary C. Williams '76 Frederick W Mielke,Jr. '49 Los Angeles, California San Francisco, California William W Saunders '48 Honolulu, Hawaii Charles B. Wright '81 Kenneth F. Montgomery New York, New York (Harvard,JD '28) Patrick T. Seaver,JD/MBA '77 Chicago, Illinois Los Angeles, California

Hon. Carlos R. Moreno '75 Charles D. Silverberg '55 Compton, California Los Angeles, California

William E. Murane '57 Marsha Elaine Simms '77 Photos byJohn Sheretz Denver, Colorado New York, New York Design by Nancy Singer

48 Fall [988 STANFORD LAWYER HIGH TECHNOLOGY want to make sure the trade regime is Do some people say, "Why should we (Continued from page 8) set up so that the market is available give technology to others? They'll just internationally, rather than as 150 lit­ take business away from us:'? some Pacific Rim policy issues. I ex­ tle markets within individual coun­ pect that the next edition will also give tries, with problems translating data Yes-we're hearing that very strongly, some attention to service exports. from one country to another. The particularly in the agricultural area. issue is not just the quantity ofsales, A number ofAmerican farmers are "Service exports"- Are those people but also the quality and efficiency of concerned about the help we've given you send as consultants and services that can be provided. to farming throughout the world. managers? Ofcourse, other countries are mak­ They've even gotten legislation against ing similar requests that we open up helping with crops for which there Partly, but it's much more than that. our service markets to them. Don't be are U.S. surpluses. It became a big issue with telecommu­ surprised if you hear that groups in I have some very strong counter­ nications, which, for example, allow India are offering to provide com­ arguments. Fundamentally, there is a computer network to provide data prehensive legal research services to the equity argument that those peo­ processing for banks or airlines all American firms! ple need a chance, too. And you can over the world. Service exports also certainly convert that into the self­ include insurance, construction, edu­ interest argument that if we try to cation and training, professional serv­ What about "technology transfer"? keep the other four-fifths of the world ices, entertainment, transportation, Tell me about your study for down, we're asking for all kinds of travel and tourism (the hotel industry, the U.S. Agency for International trouble-comparative birth rates for example), and hospital services. Development. make that clear. One of California's surprising ex­ But there are a couple of other good ports is the management ofhospitals We were interested in the most effec­ reasons. First off-it's going to hap­ throughout the world. tive ways to help developing nations pen anyway. Technology is not as con­ Another interesting fact is that­ acquire modern technologies. The trollable as it used to be. Ifyou try to contrary to what people may expect­ debate had tended to focus on pat­ stem the flow, people will sneak across unionization is about as high for jobs ents, license arrangements, and the the borders. There is no way to con­ in the export services sector as for like. However, we concluded that the fine it, now that we are in a world jobs generally. key issues are entrepreneurship, man­ economy. I got involved through a study for agement, and the ability to acquire Nor should we want to. This is our the California StateWorldTrade Com­ technologies. Ifyou put a technology competitive advantage: developing mission. 4 The state's service exports into a developing country and walk technology. When we supply it to are now $12 million, vs. $14 million away, nothing is going to happen. You other countries, we will go on and for goods. You could say that we have to have a group there that wants develop more, because that's what export almost as much in airline seats to use the technology. we're best at. This is what happens and over the wires as we do in the A classic example is what happened with the United States andJapan. holds ofplanes and ships. in Korea, where fifteen or twenty years And for developing countries, it's ago some little construction company like priming the pump. You have to That's amazing. Is there a problem? would get a subcontract from a U.S. provide some strength to these econ­ company to build something, and omies if they're to become better Not a problem, but a very compli­ learn enough to build a second one trading partners- particularly when cated negotiation. Several people in themselves. The third one, they ex­ the debt crisis makes it essentially government, together with certain ported. Today Korean construction impossible for these countries to large U.S. businesses, have pushed to companies are among the most effi­ get large-scale investment capital. have international negotiations on cient and successful in the world. Importing technology is the only services, and they're now on the agen­ We therefore recommended that chance they have. 6 da for the current Uruguay Round of U.S. development programs emphas­ international trade negotiations. ize entrepreneurship in the developing To repay their loans? Firms like IBM and AT&T see the world- that they make sure there's potential for becoming major movers a group that really wants the technol­ Exactly. Indeed, statistics show that, ofinformation, providing all kinds ogy and that the management and for the United States, technology is of complex, sophisticated computer training aspects ofthe project are responsible for about half the eco­ services over global networks. They consistent with that.5 nomic growth since World War II-

STANFORD LAWYER hlll/y81i 49 not capital investment, but new ideas. me to speak to the Soviet people? when we should be focusing on the Technological advances make this social issue. Take, for example, Bho­ Should ourgovernment start treating an immediate question. What about pal, Three Mile Island, and Chernobyl. R&D expenses more favorably? the direct-broadcast satellite that In all those cases, the technology was I've heard that they are subsidized is going to hover over the U.S. and dangerous, but the human problems in]apan. transmit programs into Canada and were what produced the disaster. You Mexico, completely upsetting the can't read the history of the Cherno­ Well, Japan doesn't subsidize them as economics ofeach nation's television byl mess without saying, "How could much as some u.s. people will tell system? And what if the messages anybody be so stupid?" you. But, yes, I think our government being broadcast into these or other The obvious implication: We ought should be more encouraging. countries are ones that their govern­ to be thinking less about techno­ ments don't want? Is this a problem? logical fixes (like fancier kinds of You mentioned borders. Would you I don't think so. I think you should computers) and more about human say that one solution to illegal immi­ be entitled to broadcast wherever and factors -like education, training, and gration is the export oftechnology, so whatever you please, provided you management structures. that people can earn a living in their satisfy radio interference rules. But a Another example has to do with own country? lot ofmajor international law scholars Accutane, a chemical beneficial to believe that governments should have people with certain complexion prob­ Absolutely-and not just technology. a right to restrict what comes in from lems. Because it may also cause birth One good approach is the maquila­ broadcast satellites. defects in pregnant women, we have dora program, which is in essence a been considering taking it off the mar­ program ofproduction in the north­ I imagine that for Moslem countries ket. Isn't there a way, by working with ern strip of Mexico for the u.s. trying to maintain a regime ofmoral­ doctors, to give people who are not at market. That area is now the most ity, Hollywood-style broadcasts from risk the opportunity to use the drug? prosperous in Mexico. This has un­ the sky would be a horror. doubtedly helped some people stay at Do you think medicines are being home, though others have perhaps Ofcourse. And a lot more examples overregulated? made it a way station to the U.S. like that are in the offing. There's little I'm uncomfortable with immigra­ question that the VCR is among the I want to know more before giving a tion restrictions on ethical grounds. most important sociological develop­ solid answer-liability risks may be as Moreover, with economic disparities ments since the book. The extent to much ofa brake as regulation on the as great as they are now, there's bound which videotapes are being smuggled development and sale of drugs. How­ to be a flow ofpeople, regardless of into countries with even the most ever, regulatory barriers do seem to what the law says. puritanical regimes is fascinating. be holding back new biotechnologies that might be less detrimental to the What is your interest in human rights? With technology moving so fast, environment than chemicals currently how can political and legal systems used in agriculture. This grew out ofmy interest in devel­ keep up? oping countries. My Human Rights What else should we be doing course asks: Under what conditions Technological changes do change differently? does it make sense to handle human the political context in which we face rights internationally, and when are problems. Every major technology I'd like to see less emphasis on the we better off letting nations handle it may undercut some body ofregula­ Export Administration Act. I would for themselves? The answer isn't tion-perhaps in a very healthy way­ like us not attempt to restrict arrange­ always obvious. and it's hard to predict what those ments like Fujitsu and Fairchild mer­ I also look at what might be called changes will be. Just think ofthe auto­ gers. And I think we should not inter­ "international human rights" -rights mobile and its implications for per­ vene over trade barriers. that arise simply because we have an sonal mobility, family structure, and What we should do is more work international system. The question sexual mores, let alone tort law. The on education-our own education. here is not, Why do we have interna­ personal computer will have compar­ And I think we should be trying to tional institutions to protect freedom able implications, as will some of the deal much more responsibly with tech­ ofspeech within countries? But rather, biotechnologies. nology in the administrative process. What is international freedom of We have a bizarre way, however, How long does it take to approve a speech? Is it, for example, allowing of focusing on the technological issue product, a chemical? Can we move

50 Fall [988 STANFORD LAWYER more rapidly and still be safe? I sus­ tion. Unless product liability rules are I think it's a real problem. People pect we can do a lot better. right, we're going to slow the devel­ are unwilling to risk trying to learn Congress and the state legislatures opment oftechnologies and slow something about the other culture, also need to think more about tech­ the extent to which we can benefit although usually once they do, they nology. They tend to forget thatalmost from them. do pretty well. any barrier to flexibility is a barrier to The gulf seems to be narrowing, the development of new technologies. How can Stanford Law School help? though- at least in our student body. And I think they probably forget also We've had the Stanford Law and that the biggest innovations are most There's an urgent need for serious in­ Technology Association since 1984. likely to come from the small- and tellectual work on trade secret ques­ Students are very interested in high­ medium-sized companies. tions, the U.S.ljapan technological tech questions and seem to be more relationship, and other issues we've comfortable with them than in the Do you think legislators focus too been talking about. I'd like us to past. There are computers all over the much on the big companies? develop suggestions for legislation place, and you can talk about recom­ and other ways ofchanging the legal binant DNA in the classroom without It's a risk, particularly given the PACs system to help the high-tech sector too many eyebrows going up. and other campaign contribution work better or more safely. arrangements. The numbers show There are also important questions What would you tell a graduate who that most new jobs in the last decade about the kinds ofchanges likely to says, "I'd like to know more about have been created by the small and be imposed on the legal system as a . science and technology, but can'tgo middle-sized companies. Yet it's the result of specific technological devel­ back to school." big ones which often have the greatest opments, for example, the new sorts political access. ofevidence. It's the nature ofthis field Start reading, whether it's Scientific I think the small- versus big-com­ that new questions will crop up for American, Science magazine, or just pany issue is going to be important. every one that gets answered. the articles about science and technol­ The current arrangements emphasiz­ TheSchool has, as you know, under­ ogy in the New York Times. Don't ing patents and trade barriers some­ taken to organize a Stanford Interna­ feel threatened. Read in the areas that times tend to protect large companies, tional Centerfor Law andTechnology. are ofinterest to you. which can afford litigation, at the A lot ofthe building blocks are there; expense ofsmall ones. others will take additional funding Is there any message you'd like to The standards debate also relates and people [see page 9-ED.]. It's leave with our readers-mostly prac­ to this issue. Should we encourage a something I'm working very hard on. ticing attorneys? whole industry to agree on product But being where we are-at a leading standards, so that parts will be inter­ research university, in the middle of I think lawyers should be aware that changeable? The person who defines an area ofhigh-tech innovation, in the the character ofproperty is changing. the standard- usually the bigger state most active in trading with the We should recognize that a prime person- has some advantage over Pacific Rim- makes us a natural form ofwealth is an educated per­ the others. leader for this kind ofwork. son, and we should develop arrange­ ments to give that person the incentive Are there other issues we should What led you-a Sylvania engineer and tools to produce. That has impli­ watch for? in your late twenties- to go to cations in employment law, trade law, law school? product liability-all kinds of areas. Oh, yes. There are going to be a lot I'm also concerned that the legal oflegal questions on spin-offs, trade I suppose, like many people in the profession is organized in a way secret law, and the liability ofem­ mid-Sixties, I wanted to solve the which makes it very difficult to ployees. One issue is balancing the world's problems. I figured I wouldn't respond more than incrementally to ability of a spin-off group to proceed be able to help unless I learned a new the changes technology is producing. without enormous litigation costs, perspective in addition to that of the We're going to need much more than versus the ability of the original com­ defense industry. incremental change. There's some pany to conduct a long-term R&D question as to whether we have the program withoutlosing its technology. You've obviously made a smooth necessary legal R&D capability for Product liability may also have to transition from science to law. But do reforming the legal system. We need be rethought. We want to make sure you notice a gulfbetween what c.P. to develop institutions-probably that we get an optimal level of innova- Snow termed the "two cultures"? around law schools, but not neces-

STANFORD LAWYER Fall 1988 51 sarily as law schools are tradition­ ABORTION AND the public consciousness. ally operated-which can consider THE LAW Prominent among the former are broader changes and build a constitu­ (Continued from page 13) laws in other nations. In Canada today, ency for such change. abortion is legal; in Mexico, though Our International Center for Law Faster, less painful, and far less sub­ not legal, it is easily obtainable. And a and Technology is, ofcourse, de­ ject to complications than older pro­ numberofCaribbeancountries,which signed to help with these needs. We cedures, it requires only the insertion have in the past helped Americans have a good academic foundation, ofa thin hollow plastic tube (cannula), evade their nation's laws, would be an advisory council loaded with prac­ through which the uterine contents are likely to do the same regarding abor­ tical experience,7 and excellent stu­ removed. In fact, until the eighth week tion. dents. It's a real opportunity! 0 of pregnancy, the cervix may not even Moreover, the price of travel has have to be dilated. declined sharply, thus making an Nor has technology ceased advanc­ extraterritorial abortion affordable Footnotes ing in this area. A new abortifacient for a muchhigherpercentage ofAmeri­ IE. g.,]. Barton, "The International drug known as RU 486 has, despite can women than in pre-Roe v. Wade Breeder's Rights System and Crop Plant anti-abortion protests, been approved days. Those who are young or poor Innovation," 216 Science, 1071 (1982). by the French government for sale and will, of course, experience greater dif­ 2Stanford Law School Working Confer­ distribution. Taken orally, itis a steroid ficulty, but for the many who live close ence on the Law and Economics of Inter­ that blocks the action ofprogesterone, to our borders, the added cost will national Technology Licensing, April 29, a hormone which normally prevents not be great. 1988. The background paper and rappor­ the uterus from expelling the fetus. The Institutions within the United States teurs' report are being published in the drug appears to have minimal side have changed as well. Agencies such as StanfordJournal ofInternational Law effects and is 80percent effective when Planned Parenthood are now far more (1989, forthcoming). The conference was funded by the School's John M. Olin Pro­ administered within the first six weeks numerous (up from 800 in 1968 to 13 gram in Law and Economics. of pregnancy. A combination of RU 4,400 today) and widely distributed. 486 and another drug has raised the Since these agencies do much more 3]. Barton and B. Fisher, The Regulation percentage of successful abortions to than provide abortions, they will prob­ ofInternational Business (Little, Brown at least 90 percent. RU 486 is expected ably continue to function even where & Co., 1986). to become widely available in Europe, abortion is illegal. And it is likely that, 4]. Barton, B. Fisher, S. Levy, R. Mendel­ China, and Third World countries.12 within the limits of the laws against son, et a!., California Service Exports: A The importance of this drug (and aiding and abetting, many agencies Strategy for the Post-Industrial World any successors) is that it will permit will give emotional support and infor­ (contract study, California State World self-abortion-safely and privately­ mation to women seeking abortions. Trade Commission, June 1987). at a time and place convenient to Moreover, unless the federal govern­ 5]. Barton, The Role ofPrivate Enterprise the woman. But once a pregnancy ment criminalizes abortion through­ in Technology Transfer (contract study, can be terminated at home with a out the nation, there will still be op­ U.S. Agency for International Develop­ drug or drugs, we have in great part erational abortion clinics in some ment, August 1986). transformed the enforcement of laws states. These will notonly serve out-of­ 6See ]. Barton, "Coping with Technologi­ against abortion into an attempt to state women to the extent that the law cal Protectionism," Harvard Business suppress a drug traffic. Since drugs allows, butwill also provide a constant Review, Nov.lDec. 1984, p. 91. are easy to conceal and sell illegally, reservoir of trained abortionists and 7The members ofthe Law and Technol­ obtaining an illegal abortion may counselors, some of whom may be ogy Advisory Council are: Lee E Benton become as easy as purchasing a nar­ persuaded to assist women disabled by of Cooley, Godward, Castro, Huddleson coticdrug. law from receiving legal abortions. & Tatum, Palo Alto; John Freidenrich '63 In short, technological advances Another institutional change since of Bay Partners, Cupertino; Carey Heck­ may already have let the genie out of Roe v. Wade (or more precisely, since man ofWare & Freidenrich, Palo Alto; C. the bottle, so far as society's ability to about five years before that decision) Bradford Jeffries'55 of Cooley, Godward, control abortion is concerned. Equally has been the development ofnumerous San Francisco; Craig W. Johnson '74 of significant, however, are the changes women's groups whose members are Wilson, Sonsini, Goodrich & Rosati, Palo Alto; John W Larson '62 of Brobeck, that have occurred since 1973 in soci­ convinced that women have a right­ Phleger & Harrison, San Francisco; Susan ety itself. constitutional or moral-to an abor­ 14 H. Nycum of Baker & McKenzie, Palo Social changes. These fall into two tion should they desire one. Mem­ Alto; and Larry W Sonsini ofWilson, related but independent categories: bers ofsuch groups wouldprobablyact Sonsini, Goodrich & Rosati, Palo Alto. institutional changes and changes in not only as a support for those seeking

52 fall/glill STANFORD LAWYER abortion, but also as a conduit of Perhaps the most important effect, the struggle can be measured. information. Of course by doing so, however, would be on the behavior of First, the number of abortions per­ they might become criminally liable the legal system. The increase in public formed. It is my contention that be­ for aiding and abetting criminal acts. tolerance of abortion would make it cause of technological advances and It is not clear, however, whether the hard for prosecutors to come by juries the nature of our political institutions, threat of prosecution would be real, willing to convict individuals who per­ no great decrease in abortion would nor how many women would be so form abortions. Difficulty in obtaining occur as the direct result of any over­ ideologically committed as to be convictions would of course tend to ruling of Roe v. Wade and its statutory undeterred by the law. make prosecutors more reluctant to aftermath. Perhaps more important than such prosecute abortionists and police to That is not to say that, in the long institutional changes is the basic shift investigate them. Police priorities may run, even the relatively ineffective in popular consciousness on abortion. also be influenced by the fact that in enforcement ofthe criminal law would In 1965, only about 15 percent of the abortion cases, there is no seizable and have a negligible effect. We have often population believed in a right to abor­ forfeitable property. Such forfeitures, seen that a demand which seems quite tion on demand; now (as the polls which are increasingly a source ofear­ inelastic in the short run turns out to mentioned earlier indicate15 ) half the marked funds for law enforcement, be more elastic over time. Even slight population does - and a significant provide an incentive for police depart­ increases in the difficulty of abortion proportion believes in that right pas­ ments to devote more energy toward may be met by some increase in the sionately. This would have a number the drugproblemthan to less profitable use ofcontraception, some decrease in of effects besides the obvious ones of vICe cnmes. sexual activity, and some increase in preventing the reenactment of anti­ childbearing. It is likely, however, that abortion laws in many states and mak­ Symbols and Realities abortion rates will in the long run be ing major federal intervention in the more influenced by such factors as area difficult. The ultimate result ofthe overruling of changes in overall fertility, greater or One effect would be in the willing­ Roe v. Wade would be to reintroduce less absorption of women into the job ness of competent medical personnel abortion as a vice crime, and one market, variations in welfare policies, to perform abortions forbidden by law. especially hard to suppress, at that. andchanges in contraceptive methods, The recent period oflegal abortion has The result could be seen as a kind of than by the legal treatmentofabortion. reduced the stigma attached to the pragmatic American compromise­ The number of abortions, however, procedure and rendered formal, non­ intended and desired by no one but is not the only dimension by which governmental sanctions (such as ex­ not completely without precedent. groups may measure their success in pulsion from medical societies) less Although we are adamantly opposed this battle. We must remember that likely. Also of potential importance is on moral grounds to opiate addiction, the two groups that care most deeply the fact that one-half of the obstetric we give methadonetolarge numbersof about the issue are engaged in a and gynecological residents in the heroin addicts. While we are opposed symbolic as well as practical struggle. United States today are women. Thus on moral grounds to gambling, we According to Kristin Luker's superb the physicians performing abortions permit many states to have lotteries and sensitive study of the issue,16 the under a future regime of illegality and, indeed, do not enforce gambling basic dispute is over the proper role of might tend to be somewhat more laws in most of the others. Though we women in our society. Many, if not moved by ideology and compassion, spend hundreds of millions of dollars most, "right-to-lifers" regard mother­ and less by desire for profit, than battling marijuana, the drug is widely hood and the raising of a family as the the illegal abortionists of pre-Roe v. available in virtually every American most importantfunction a woman can Wade days. high school and college. perform, and their entire ideology, Womenseeking andobtainingabor­ Does this mean that the energy and including their views as to the proper tions would also be affected. They passion spentin politicking by both the purposes of sex and the status of the would fear less the social stigma of pro-choice and the pro-life sides would fetus, follows from this view. Others being revealed. And if, as also seems have been wasted? The answer, on have different reasons for assimilating likely, the percentage of botched reflection, is perhaps more compli­ the fetus to the status of human life abortions were well below the pre­ cated than appears. Although the (rather than merely "prospective life") 1973 level, there would be fewer abortion issue can be seen as a kind of and, hence, for regarding abortion as women with a motive to cooperate zero sum game in which two groups, murder. All, however, hold their posi­ with the police-and fewer cases to both ofwhom care passionately about tion as a moral one and often refer with come to police notice through routine the matter, are engaged, in fact, there some contempt to abortion propo­ medical channels. are several dimensions along which nents as "utilitarians."

STANFORD LAWYER Fall/988 53 On the other hand, the "pro-choice" order to express correctly the value the days before the Supreme Court's group, which espouses abortion on society gives to human life. controversial 1973 ruling. 0 demand as a woman's right, regards For pro-choice advocates, however, motherhood as but one part of a the overruling ofRoe v. Wade would be Footnotes woman's role. They see abortion as a a setback, both symbolically and prac­ 1 "Opinion Roundup: Abortion," Public necessary means of controlling a tically, with no compensatingimprove­ Opinion, April/May 1985, at 27. woman's fertility so that she can per­ ment. The symbolic defeat will be felt form adequately in the labor market as notonly by thosewho are ideologically 2 See G. Gallup, Jr., The Gallup Poll, Jan.! well as in her own family, should she committed to the pro-choice position, Feb. 1986, at 18. choose to have one. but also by non-ideological women 3 Supra, note 1. The symbolism of the overruling of with unwanted pregnancies. No mat­ 4 K. Luker, Abortion and the Politics of Roe v. Wade and its likely aftermath ter how easy it may be to procure an Motherhood (1984) at 154, 236. would clearly be more to the liking of illegal abortion, there is an inevitable the anti-abortion advocates. Itwas the loss of dignity in having to act surrep­ 5 See]. Kaplan and]. Skolnick, Criminal shock of that Supreme Court decision titiously and participate in a violation justice (4th ed., 1987) at 619. Also F. which galvanized many of them into of the law. Zimring and G. Hawkins, Capital Punish­ ment and the American Agenda (1986), action to begin with, even though Those committed to a pro-choice Ch.2. many lived in states such as California ideology would also be concerned that and New York where abortion was the burden of anti-abortion measures 6 See W Cates, "The Hyde Amendment in already relatively free. Which particu­ is borne primarily by the poor and ig­ Action," 246JAMA 1109 (Sept. 1981). lar facet of Roe v. Wade triggered their norant-an affront to ideals of equal­ 7 Bigelow v. Virginia, 421 U.S. 809 (1975) activism may determine whether they ity as well as of women's rights. More­ holding states may not strip speech ofFirst can be satisfied with a situation in over, abortion, when illegal, will Amendment protection by criminalizing which abortion is no longer legal butis always be more dangerous than when abortion information advertisements. still for the most part obtainable. legal. 8 For example, 18 U.s.e., Section 1821 Nonetheless, widespread criminal Pro-choice advocates would further (1982) making the transportation of den­ laws against abortion would remove lose by being forced back into the tures into states with local monopolies several affronts to the anti-abortion political arena to defend what they see illegal. forces. First, they would no longer be as an inalienable right. Being generally 918 U.S.e., Section 922 (1982). shocked by the high number of abor­ more involved in careers and other tions reported by health and census activities outside the home than are 10 See M.e. Brucker and N.]. MacMullen, authorities. Under today's conditions the anti-abortion activists, they would "What'sNew in Pregnancy Tests," 14 jour­ nalofObstetric, Gynecologic, andNeona­ all ofthe 1.3 million legal abortions are feel much more keenly the additional tal Nursing, Sept.!Oct. 1985 at 353. counted, classified and published, and demands upon their time and energies. the number itself appalls many people. Nonetheless, it can be expected that 11 See "Illegal Abortion Deaths in the Illegal, covert activities are not tallied they would continue to contest every United States," 14 Family Planning Per­ nearly as well and must be estimated ­ effort by anti-abortionists to enactnew spectives No.3 (May/June 1982) at 164. See, generally, Center for Disease Control, a process far more easily disputed or statutes, and that, given the permissive Abortion Surveillance 1974-1976 inclusive ignored. climate of public opinion, they would for trends in illegal abortion and mortality, Next, the passage of anti-abortion frequently prevail. both pre- and post-Roe. laws-even without a significant In sum, if Roe v. Wade were over­ reduction in the number of abor­ ruled, we might safely predict political 12 See "France Ordering Company to Sell Its Abortion Drug," New York Times, Oct. tions - would remove the feeling of battles over abortion on an unprece­ 29,1988. complicity that has clearly disturbed dented scale, leading eventually to a many of the "pro-lifers." One anti­ situation where somewhat fewer abor­ 13 See "Organized Family Planning Serv­ abortion writer argues that political tions would take place than under ices in the United States, 1976-1977," 11 action is essential "to rid us ofthe guilt conditions of complete legality. The Family Planning Perspectives 6 (Nov.lDec. we involve ourselves in as a nation by change would unavoidably be felt 1979) at 342. permitting mass nationwide abortion mainly by the poor and the ignorant. 14 See K. Luker, supra, note 4. to continue."17 Nonetheless, most looked-for abor­ 15 Supra, notes 1 and 2. Finally, anti-abortion activists desire tions would take place and at a cost the criminalization of abortion for and a level of medical risk consider­ 16 Supra, note 4. educational and moral reasons. Many ably closer to that of a legal abortion 17 See H.O.]. Brown, Death Before Birth believe abortion must be outlawed in today than to the illegal abortions of (1977) at 156.

54 Fall I988 STANFORD LAWYER BANKS IN TROUBLE existing uniform insurance premium creditor) loss for the insurer to bear. (Continued from page 17) system. Premiums could thus be uniformly • Variable premiums. Rather than nominal without a distortion of man­ • Decrease institutional risk. The making the institution fit the premium, agerial and owner incentives. idea here is to control the risk of each the objective would be to make the There are, however, practical prob­ institution so that it fits the statutorily premium fit the institution. Premiums lems in this approach. To begin with, fixed, uniform insurance premium. would, therefore, vary on the basis of the grounds for closure of a bank are That involves two main elements-(a) assessed risk, much as they do for auto specified by the law of the jurisdiction control of asset risk, and (b) control of and other insurance. in which it is organized, so there are financial (leverage) risk. Under this approach, it is even more differing provisions across the federal The control ofasset risk is the objec­ essential to be able to measure the risk government and fifty states. The prob­ tive of portfolio regulation. Banking of each institution. As already noted, lem is confounded by the discretionary law contains a number of restrictions that is a difficult assignment for a bank nature of the decision, which is vested on investments in securities and loans, regulator, both empirically and politi­ in the bank's primary supervisor (char­ and various avenues exist for expand­ cally. For this and other reasons, the tering agency). ing and refining them. Foremost of the banking insurance agencies have fluc­ Another current problem is that the several criticisms made of such asset tuated between tepid support and out­ insolvency determination is usually regulation is that it focuses on the right hostility. made on the basis of the book value of riskiness ofindividual investments and The alternative to public agency dis­ assets and liabilities, as defined by loans, or categories thereof, in isola­ cretion in assessing risk and premiums regulatory accounting (rather than tion. This is contrary to the basic tenet would be to rely on a private market GAAP) principles. Book value insol­ of modern portfolio theory that the consensus. One such suggestion in­ vency usually indicates a substantial riskiness of a portfolio is determined cludes a requirement that the institu­ loss to the insurer upon liquidation: in the aggregate by the co-variance of tion obtain private insurance for a the market value of the equity of large its various elements. Another short­ portion of its deposit liability. A sim­ banks has in fact been below book coming is that such legal rules are pler device in my view would be to value for more than ten years. not well adapted to foreign loans and require atleast the larger insured banks The suggestion that banking agen­ investments, for which they were not to issue short-term unsecured debt, on cies adopt market-value accounting designed. a parity with the status of FDIC as requirements has been met, among The second element ofinstitutional­ subrogee ofinsured deposit claims. other objections, with the assertion risk control is to focus on the bank's A caveat relates to information costs that markets needed to give valuation capital position or leverage. In the and disclosure policies. Bank exam­ do not exist for many categories of strongest form of this technique, one ination and supervision has func­ bank assets. Thepoint is bothvalid and could let the institution choose the tioned historically in an atmosphere susceptible to exaggeration. Second­ asset composition and risk level it pre­ of secrecy and confidentiality, lest the ary trading markets are being devel­ ferred (which is difficult to prevent in public be unduly alarmed and cause oped in previously rarely traded assets, any event), but then adjust the required unnecessary runs. A trend towards such as foreign government loans, and capital accordingly. greater disclosure has developed but the process could be deliberately en­ Whether a banking authority relies by no means equals that customary in, couraged or even mandated. on controlling asset risk or controlling say, the area of securities regulation. These difficulties with automatic financial risk, or on some mix of both, Additional difficulties in information closure based on market-value insol­ it needs to be able to measure an in­ and disclosure occur with respect to vency, while not technically insuper­ stitution's risk in a fairly accurate and international operations. able, pale before the problem of defensible manner. Modern portfolio Another caveat lies in the definition political willingness and feasibility. theory affords the analytical tools for of risk. For various reasons, regulatory There seems to be a near-universal doing so, but the necessary empirical and political, the procedures by which political tendency to delay action detri­ data are only partially available. That banks are declared insolvent differ mental to the recipients ofgovernment makes fine distinctions hard to justify, from those in other business enter­ credits and guarantees. The Federal and leads regulators to use broad cate­ prises - a situation addressed next. Home Loan Bank Boardhas for several gories or uniform requirements. So a • Timely bank closures. Iftroubled years been keeping hundreds of insol­ distortion of managerial incentives banks were consistently closed at or vent thrifts in operation. And in the seems certain to persist under this just before the point at which their case of large banks, the FDIC has approach, though it should be possible liabilities exceeded their assets, there adopted an implicit policy that it will to make it less severe than under the would in theory be no depositor (or avoid liquidation or deposit insurance

STANFORD LAWYER Fall [988 55 payout. In 201 failing bank situations and savings accounts offered by such but only of investment risk. Although between 1979 and 1984, the FDIC a bank would be covered by federal proponents formulate their proposal afforded de facto 100 percent coverage deposit insurance. On the other hand, in terms of separate incorporation, of all liabilities in all but one case commercial and consumer lending that does not seem essential. The (Penn Square Bank, in 1982), when and other riskier assets would be trans­ needed separation could be accom­ the size of the bank was greater than ferred to an affiliated nonbank institu­ plished in the setting ofa single institu­ 1 percent of FDIC's reserves. Such tion and funded by uninsured invest­ tion, simply by requiring that "depos­ policies, while perhaps politically nec­ ments and instruments; since federal it" or "transaction" account balances essary, obviously run counter to eco­ deposit insurance would not apply to be invested in andsecured by a lien on a nomic cost-minimization. the affiliate, it would raise its funds at pool of relatively riskless assets. What can be said, then, of these market rates commensurate with its The second objection calls into approaches to making the present portfolio risk and notbe restricted in its question the operational practicality deposit insurance system viable? Port­ permissible investments or activities. of the intended separation. Since de­ folio regulation, or control over asset This proposal can be seen either as posit account balances would earn risk, has always been the least satis­ an intellectual descendant of earlier only at the risk-free rate of return and factory form of bank regulation­ suggestions of 100 percent reserve would generate large costs from the conceptually defective, limited in banking4 or as an extension of re­ payment clearance process, the return coverage, and historically ineffectual. cently developed money market mu­ to the customer would be lower than at Itis notlikely to be more effective in the tual funds. It undertakes to break the present and might at times be negative. evolving international markets. But link between risky assets and riskless That, it is said, would create incentives capital requirements, market-value claims that is the vulnerable spot in to avoid the separation by devising new accounting and closure rules, and vari­ the present structure of banking and payments instruments, uninsured but able insurance premiums could be deposit insurance. The role of depos­ offering higher returns, so the outcome combined in a number ofways to yield it insurance would be diminished, would be a payments system compris­ an insurance system that is sounder but not necessarily eliminated. If a ing both riskless (insured) and risky and less incentive distorting. Thatis the bank failed, the insurance corporation (uninsured) instruments. Such a sys­ direction the banking authorities are would provide continued access to tem would again be vulnerable to likely to take, though no doubt in a checking account balances and un­ panics and general runs on solvent but slow-moving and erratic way. interrupted clearance of transactions illiquid institutions-the very result while the securities pool was being deposit insurance was instituted to A More Radical Proposal marshaled and liquidated. For these forestall. functions, the cost would presumably This objection is not without merit, Let us now look at another, more be low and hence a small premium and a full discussion of the bank run revolutionary alternative: separating sufficient. There would probably be no issue would greatly extend this article, deposit banking from risky lending necessity for the insuring agencies to but a few observations may be in order. and investment activities. If this pro­ make risk determinations for individ­ The general run or panic phenomenon posal were implemented, bank ual institutions; if the portfolio restric­ is basically an information externality regulation, including concern over tion for investment ofdeposit balances problem and would best be dealt with international operations, would be permitted little variation in risk, a uni­ as such. It grows out of an inability on greatly simplified or eliminated. Nei­ form premium would be quite feasible. the part of creditors to distinguish ther banks (with a subsidy to protect) Criticism of the riskless bank con­ confidently between solvent and insol­ nor bank regulators (with careers to cept centers on two aspects. The first is vent institutions-an uncertainty the protect) could be expected to be enthu­ the question of inefficiency, engen­ traditional "bank secrecy" treatment siastic about the concept-which dered by segregating deposit services of examination reports certainly does makes it a fitting subject for academic from nondeposit services with a result­ nothing to relieve. As for a run on an attention and further exploration. ing loss ofeconomies ofscale or scope. individual bank ofdubious solvency, it The idea is to create "riskless" banks The extent of such economies is at is wholly appropriate; indeed, it is an through a separation of their pay­ present difficult to estimate, but devel­ integral part of that "market disci­ ments and investment functions. 3 De­ opments generally in the field offinan­ pline" which the banking agencies are posit banking would be carried on in a cial services suggest they can be signifi­ now starting to promote. "narrow" bank, which could invest cant. However, the point has less force A final advantage of the narrow only in virtually risk-free assets, such as in the context of the riskless bank bank concept today is that the extent short-term Treasury securities or per­ proposal, because the separation is not of international lending or activities haps commercial paper; the checking necessarily of production or delivery, becomes irrelevant, since it does not

56 Fa/l1988 STANFORD LAWYER affect the deposit security pool. Would the nonbank affiliate be at a competi­ tive disadvantage in carrying on such activities, because it would be deprived of the core deposit base? Perhaps-in the sense that it was deprived of an existing subsidy obtained from the government in the form of an insuf­ ficient deposit insurance premium. Only a banker, however, could con­ sider that unjust. 0

Footnotes

l These and other factors affecting savings and loans were discussed in Scott, "Thrift Institutions in a Changing World," Stan­ Alumni/ae ford Lawyer, Fall 1983, p. 10. Weekend 1989 2 See E. Kane, The Gathering Crisis in Federal Deposit Insurance (1985); and K. with Scott, "The Defective Design of Federal Deposit Insurance," Contemporary Policy Class Reunions Issues 5:92 Gan. 1987). USC/Stanford Football 3 See, e.g.,]. Kareken, "Federal Bank Game Regulatory Policy: A Description and Dean's State ofthe Some Observations," 59J Bus. 3 (1986); R. Litan, What Should Banks Do? School Report (Brookings, 1987). and much, much more. 4 H. Simons, Economic Policy for a Free November 3-4. Society (1948), 62-65; M. Friedman, A Program for Monetary Stability (1960), Details to follow. 65-75.

STANFORD LAWYER Fall/988 57 RADUATES in the Pacific Northwest had their turn to meet the new Dean last spring, Gas Paul Brest continued his cir­ cuit ofalumni/ae strongholds through­ out the country. He was accompanied on this swing by his wife, Iris, and Associate DeanJohn Gilliland. The first event, in Seattle on April 27, was a reception with the Washington Law Society. Over 75 interested gradu­ ates came. George Willoughby'S8 provided both the venue (the Rainier Club) and introductory remarks for the Dean's talk. The decanal party was in Portland the following evening for an Oregon Law Society get-together. Held at the River­ Place Alexis Hotel, the reception drew some 70 grads. Doug Houser '60 did the honors. The Oregon group put on another event September 15, this time at the Hilton in Eugene. Law Society presi­ dent Mary Ann Frantz '78 arranged the wine-and-cheese reception for Stanford lawyers at the Oregon State Bar's annual meeting.

Seattle, April 27. Dean Brest was welcomed by a group (top) including George Willoughby 'S8,Jackie Brown '75. and Joseph Gordon, Sr. '34 (at left), and John Reed '77 and wife, Karen (at right. with Brest).

88 Fal//988 STA FORD LAWYER Portland, April 28. Douglas Houser '60 (below, right), John Fenner '51 and Michael Holmes '60 (left, with associ­ ate Dean John Gilliland) were among the Oregonians who turned out for the decanal reception.

The Dean's travels last spring included graduates, with aJuly 21 gathering at May 22 with a tour ofthe]. Paul Getty a remarkable gathering of Stanford Arnold & Porter. Former Professor Jack Museum in Malibu. Terry Hughes '84 alumni/ae in Washington, D.C. The Friedenthal (now dean ofthe George and Pam Miller Ridley '79 arranged the occasion was the two-day inaugural cel­ Washington University arional Law excursion, which included a reception ebration ofthe University' new Stan­ Center) and his wife, Jo Ann Friedenthal in the museum courtyard. ford-in-Washington campus. For '60, were among the 65 guests. Credit The group's now annual Hollywood alumni/ae lawyers, there was a special, for this affair goe to Law Society Presi­ Bowl Night took place September 10, black-tie dinner May 16 held (thanks to dent Neil Golden '73, wine maven Bob with a picnic and concert featuring Associate Ju tice Sandra Day O'Connor Carmody '62, and Arnold & Porter Boston Pops conductorJohn Williams ,52) in the Great Hall ofthe Supreme ho t Norm Sinel '66. This year's wine and the Lo Angeles Philharmonic. Court (see page 21). selections were, by the way, French The lighthearted program was titled The Law Society ofWashington, D.C. champagnes. "Hooray for Hollywood." Hooray also continued their tradition of annual The Law Society of Southern Califor­ for organizers Geoff Bryan '80 and wine-tastings for summer associates and nia held a variety of events, beginning Frank Melton '80.

STA, FORD LAWYER Fall /988 89 Crown Quad,July 15. A crowd offrazzled Bar aspirants, includ­ ing Kimberly Pesa­ vento '88 (near left), partook ofthe Crocker Garden buffet. Fellow 1988 grads Tom Galli, Scott Reisch, Randi Teichman, Stephen Villanueva, and Teresa Taurino were snapped (far left) with Professor Hank Greely.

The indefatigable Angelenos recon­ vened November 12, for a Stanford­ UCLA football match in the Rose Bowl. Bob Epstein '83 and Frank Melton '80 (again) arranged a pregame tailgate party and block seating for the game itself. Reports are that the good com­ pany more than made up for the Cardi­ nal's 17-27 loss. The San Francisco Law Society spon­ sored a luncheon May 19 featuring Hon. Winslow Christian '49, senior vice-presi­ dent and litigation director of the Bank ofAmerica and a former justice of the Toronto, August 8. California Court ofAppeals. Christian The AAlS reception discussed lender liability, in a talk titled drew Sam Barnes '49 "Bankers and Borrowers: How Will the and Ralph Perry '63 Game Develop?" The event, which Don (above) with their Querio '72 organized, was appropriately wives, Beverly and held at the Bankers' Club in the B-of-A Betsy. Also shown building. (right) are Myrl The San Francisco highrise was also Scott '55, his wife, the site, on August 2, of the Society's Joan, and JoAnne annual reception for Bay Area alums, Deluce (wife of summer associates, and incoming stu­ Richard '55). dents. This year's gathering provided a welcome opportunity for the School's new Assistant Dean for Student Affairs, Sally M. Dickson, to meet nearby mem­ bers of the Law School community. Stanford law alumni/ae from throughout the state attended a School-

90 Fa" 1988 STANFORD LAWYER Monterey, September 26. Associate Dean Robert Weisberg '79 (left) spoke to a CBA gathering including Judge Miriam Wolff '39, Orrin Finch '53, and Rose Finch (below), as well as Charles Page '58 (shown at bottom, with John and Nancy Gilliland).

sponsored luncheon in Monterey on September 26, coincident with the annual meeting of the California State Bar Association. Professor Robert Wei berg, Associate Dean for Academic Affairs, was the main speaker, with a thought-provoking talk on "Capital Punishment: The Future in California." John Gilliland served as host for the Monterey Plaza affair. Stanfordites venturing northward for the 1988 American Bar Association meeting in Toronto crossed paths at a reception August 8 at L:Hotel. Gilliland brought greetings and news of the School. Most of the School's newest gradu­ ates were, however, more preoccupied with qualifying for the Bar. Outofcom­ passion for those cramming at Crown Quad, Dean Brest sponsored a buffet luncheon onJuly 15 in Crocker Garden. Both faculty and staff howed up to lend sympathy and support. Upcoming events include the biggest annual gathering of them all: AlumniJae Weekend, scheduled in 1989 for ovem­ ber 3-4. News of thi and other gath­ erings for Stanford lawyers will follow. In southern parlance, "Don't be a stranger!" 0

STA FORD LAWYER Fall [988 91 ADVERTISEMENT LETTERS A group ofstudents and alumni/ae I wholeheartedly have formed an organization applaud the ap­ -Progressive Lawyers Alumni proach to the Law Network ofStanford Law and Business Pro­ School (PLAN)-to promote gram ("What's Next communication and information for Business Law," Attention: exchange among those with similar Spring 1988). As a concerns. ]D/MBA out of law school only a few Public The first issue ofour semiannual years, I still appreci­ newsletter was sent out this summer, ate the place on the learning curve where and a directory of members is being the combined program placed me vis­ Interest- prepared. a-vis my contemporaries. To join our network. please send My particular concern, however, is that internalizing the MBA portion of Oriented $5.00 and your name, address, phone the joint degree program may deny stu­ number, year ofgraduation. and cur­ dents some of the "shared experience," rent employment to: which often helps form relationships Graduates PLAN, c/o NLG with business clients. For example, I am Stanford Law School treated differently by finance directors merely because I have a business degree Stanford. CA 94305-8610 and am therefore deemed to be a mem­ ber ofthe great fraternal business world. Secondly, one ofthe most valuable For further information. call learning experiences in the Graduate Anne Richardson (3L) or School ofBusiness was the day-to-day John Tweedy (I L) interaction with business students; their at (415) 723-3017. focus on life, success, and the spectrum in between is very often considerably different from that of the typical law student. Finally, I cannot stress enough the importance of the familiarity with a per­ sonal computer obtained at the Business School. The ability to construct spread­ sheets myself and to quickly understand the underpinnings of analyses by others are priceless advantages, which I gained TWO HEADS ARE BETTER much earlier than colleagues who pur­ sued more traditional legal paths. Stanford Lawyer magazine is illtendedas a forum for a These reservations aside, I wish your range ofviews and ideas. Readers are encouraged to ;oin project all the success in the world. the dialoglle. Space constraints may limit the nllmber and length of Kristin H. R. Franceschi,]D/MBA '85 letters published, but all will be read with great interest. Baltimore, Maryland Publication does not constitute endorsement by the editors or the School as a whole. Opinions expressed are those ofthe authors. Please address letters to: Editor, Stanford Lawyer, We are pleased to reassure readers that Stanford Law School, Stanford, CA 94305-8610. the established four-year jD/MBA joint program is alive and well. The develop­ ing LawandBusiness Program described in ourarticle simply provides a needed alternative for the many students inter­ ested in preparing for a business practice within the normal three-year span of law school.

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