The Texas Tribune has the story and the links to the pertinent documents arising from last year's turmoil. Only a small portion of the report is actually given over to criticizing the forgivable loan the Law School Foundation gave to former Dean Larry Sager (his spokesman has a sharp response to that which can be downloaded here); most of the report analyzes the history of the Foundation (whose purpose was precisely to supplement faculty salaries to make Texas more competitive) and mustering arguments against the use of the device of forgivable loans. Strikingly, on page 20 of the report, the UT System General Counsel notes:
Without speaking to issues of the use of forgivable personal loans by a public university for the moment, the vehicle of a forgivable personal loan is a highly effective and sensible recruiting and retention tool. It quite simply combines the best of both worlds – (1) it provides an upfront slug of cash like a signing bonus without the immediate tax consequence to the recipient; and (2) it provides the same retention (i.e., golden handcuffs) of deferred compensation. It is, therefore, not surprising that forgivable personal loans became a favored tool of the Law School in its drive to recruit and keep world class faculty.
Notwithstanding this sensible explanation of why the device is useful and widespread, the report concludes that such a salary supplement is inappropriate for a public university. Even more bizarrely, the AG letter says the existing loans should be terminated immediately. I'm not sure whether the proposal is to court a series of breach of contract lawsuits or simply to pay out the remaining amount in a lump sum, which would, of course, defeat the purpose of the way this compensation is structured. One can see already the consequences of this whole crisis in the disproportionate presence of former (or soon-to-be former) UT faculty in a list of recent lateral moves, and this latest development is, sad to say, likely to exacerbate the exodus of faculty.
UPDATE: I've now taken a closer look at the AG's letter, which is alarming; it states, ominously:
While we agree in large part with the Report’s recommendations regarding the forgivable loan program and the structure of the Foundation, we disagree with the Report’s recommendation about how to properly handle the Foundation’s outstanding forgivable loan contracts. The Report recommends that the Foundation no longer extend forgivable loans directly to members of the Law School faculty—a recommendation with which we agree—but nonetheless recommends that outstanding loan agreements between the Foundation and faculty members be allowed to expire on their own terms. Report at 27.
According to the Report, all the Foundation’s existing forgivable loan agreements will expire within three years. Id. at 27 n.150. Given our conclusion that the Foundation’s forgivable loan program is legally problematic, it is difficult to also conclude that such an arrangement should nonetheless be allowed to continue years into the future.
Accordingly, we conclude that the more legally sound approach requires that the Foundation extinguish its existing loans and instead allow the Law School’s new executive management to establish a properly controlled compensation program governed by applicable University policies and procedures.
Finally, when the General Counsel’s Report is published, all affected parties will be on notice that there are significant legal and ethical issues surrounding the Foundation’s forgivable loan program. Given the parties’ awareness of the prior program’s flaws, extinguishing and replacing the outstanding forgivable loan agreements is the surest step toward eliminating the possibility of future legal liability. The Report correctly notes that such action would require the involvement of both parties to the loan agreements and should not be undertaken without the advice of counsel, including tax counsel for the Foundation and for the faculty members.
This rather plainly implies that the AG may, in fact, attempt to recoup the forgivable loans. The AG, it's worth bearing in mind, is a loyal ally of the reactionary Texas Governor Rick Perry, one who has political ambitions of his own, and appears to share with Perry hostility towards the universities. If the AG actually follows through on the ominous warning, I really fear for the future of the University of Texas School of Law as a leading academic institution. I do wonder whether some of my former colleagues who stirred this particular pot are pleased with what they've accomplished.
ANOTHER: A reader with experience in a state AG's office (not Texas) has a different take:
First, I take a different read of what the Texas AG letter is saying. I read it as basically advising that the forgiveable loans are a big litigation risk because (1) everyone now knows that they are "legally problematic," and (2) they are going to be hanging out there for several years. That's a big target for a disgruntled UT faculty member, or even maybe a crazy anti-tax or anti-government taxpayer-citizen off the street. (With respect to the latter, it looks like the Foundation is set up to immunize it from a taxpayer suit, but that's going to depend on the specifics of Texas taxpayer standing rules and the Foundation's structure --and even if a lawsuit ultimately gets dismissed for lack of standing, it's still a huge hassle for everyone.) Better to wind the outstanding loans up now. And note that the letter acknowledges that "extinguishing" the loans will require both parties to agree, so I think it envisions something more like accelerating the forgiveness date in exchange for a promise to stay the required term or something along those lines (which admittedly would have tax consequences, which the letter also acknowledges). I definitely don't read it as threatening to unilaterally seek to recoup the loans.
Dean Paul Schiff Berman at George Washington University School of Law will be leaving his post in January to take over as the University's Vice-Provost for Online Education and Academic Innovation. He joined GW from Arizona State in 2011.
...are the floodgates now open for bankruptcy scholars to ascend to the halls of power? Senator Baird from Illinois? Senator Rasmussen from California? And, dare I say it, Senator Zywicki from Virginia?
This post is strictly for schools doing hiring this year; it concerns our alumni and our Bigelow and other Fellows on the teaching market. I am Chair of the Placement Committee at the Law School, and happy to supply more information, including confidential evaluations, on any of these candidates. You can reach me at firstname.lastname@example.org or at 773-702-0953. You may also contact the recommenders listed below directly, of course, but I've talked to all the Chicago ones and may be able to save you some time (or point you to the recommenders who would be most helpful given your school's needs/interests).
Here are profiles of the alumni candidates who presently have recommenders at Chicago and with whom we have worked, and so about whom we have the most information. (We have had to omit one very strong candidate working in international business transactions and international antitrust, among other areas, because her employer does not know she is on the market. Feel free to contact me for more information.) All these candidates have submitted materials to the FAR:
I know many of them, and am happy to answer questions, but that's not the point of this post. The main point is to remind my law readers that a lot of the top PhD programs in philosophy are not at "elite" universities (NYU, Rutgers, and Pittsburgh are, uncontroversially, among the top five programs in the US, on a par, or better than, Princeton and Harvard, among many others; North Carolina and Arizona are also excellent, for example). By contrast, several "elite" universities have philosophy programs that are not in the top 20, or barely so (e.g., Chicago, Duke, Penn, Johns Hopkins, Northwestern). For years, I've been the editor of the leading guide to philosophy PhD programs, based on a roughly bi-ennial survey of over 300 philosophers (including most of the leading figures in the field); Wiley-Blackwell publishes the report here. All that being said, Penn has run a very good JD/PhD program for nearly 20 years now, and any graduate of that program deserves a serious look (and esp. this year). I hope Chicago will eventually do the same, though that's a complicated story for another day! There are, in any case, no Chicago JD/PhDs in Philosophy on the teaching market.
A faculty member at SLU writes: "The theme of yesterday's emergency faculty meeting was one of sadness and dispiritment, especially as we learned how [University President] Biondi's theft of funds from the Law School (including perhaps a noted alum's estate-gift to the Law School) will impact the funding of student activities in this year and years forward. For example, it looks like there may not be funds available for student travel (e.g. moot court), student-coordinated and student-oriented legal conferences, and also the research activities of our very strong faculty."
The more I hear, the more it seems Biondi is another Silber, i.e., an autocrat, but with even less of a sense of academic values than Silber had.