GM's auditors have issued the "going concern" letter that means that they doubt the company is a going concern.  Remember, unless the company can establish viability by March 31, its bailout loans accelerate.  The Times thinks that this means not that the company's viability on that date will either be fictional or nonexistent, but that the going concern letter will be used to extract concessions from labor.  And the company's 10K, featuring an array of labor threats, does appear to support that view:

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Yesterday, I began blogging on how law schools would change "in these tough economic times."  I just read that McDermott, Will & Emory decided that free coffee on every floor was a luxury, so stopped the coffee on one floor, leading some to question the cost savings v. morale bust the decision caused.  Well, we only have free coffee on one floor anyway, but I guess Bagel Tuesday may be a victim in the future.

Seriously, I was chatting with a group that included colleagues at different law schools, and the prevailing feeling from outside our building was that the workshop culture will be changing soon and radically.  For awhile now, the workshop series has spread to law schools in all tiers.  Some may be modest (8-12 speakers a year), while others may be so ambitious as to turn even an out-of-the-way college town law school like mine into an international space station during school semesters.  With a general workshop program, and speakers invited through various other programs and institutes, Illinois has numerous guests per week, and sometimes more than one per day.  Although no one has mentioned cutting any of our speaker visits, word from other institutions, even fancier institutions than ours, seems to be that workshops may be on the cutting block.

So, what are the costs of these workshops?  Plane ticket, hotel room, dinner for 3-4 and lunch?  Depending on the location of your law school, the price tag could be $600 per speaker.

What are the benefits?  Well, as an academic, I could go on and on about the benefits.  The faculty gets to meet new folks, it's a good way to let your junior people get to meet more senior people from outside the building, faculty get exposed to new ideas that may inspire and inform their own research, etc.  And of course, workshops are especially great for the guest -- the guest gets to meet maybe 20 people, get feedback -- but the costs are borne by the host.  Of course, one can posit that by hosting workshops, your own folks may receive invitations to give workshops in return.  And, many workshop series are exchanges, like our junior faculty exchange with other midwestern schools.  In addition, I've heard many folks at various schools say that they use their workshop series as an information gathering/recruiting tool for folks they have their appointments eye on.  So, do the benefits justify the costs?

Are their alternatives?  My law buddies were brainstorming that workshops might go online.  A fancy scholar could even advertise that they would give a streaming live workshop at 12:00 EST.  It could be for free, but who knows?  Maybe there would be per-institution hookup fee like CLE.  Would anyone turn in for the junior scholar's workshop?  Perhaps someone could organize a series -- like a Wednesday lunch junior faculty series in corporate law, or something.  Would this take the place of face-to-face workshops?

Again, don't get me wrong -- I love hosting workshops and especially love giving workshops.  But, as one of my law buddies said, "Is this culture of "we invite our friends, then our friends invite us" workshops going to change?"  In these tough economic times?

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So twice in the past week, I've seen the word "disruptive" in a positive context, associated with something that is innovative.  Today, on a sidebar ad to a Chronicle of Higher Education headline email, I am urged to "Think Disruptively*" about something called "turnkey courses" from an online learning company called StraighterLine.  The asterisk referred to a note that "Straigher[sic]Line was called "disruptive" by Clayton Christensen, an expert in innovation." 

On Monday, I was preparing for a lecture in Securities Regulation on auction IPOs and noticed that the Hambrecht + Co. OpenIPO website was now all about "disruption."  A heading reads "A Disruptive Investment Firm for People Who Think For Themselves."  I am intrigued, so I click on a banner that says "If Disruption Were a Car, It Would be a Tesla" and asks "Are You Disruptive?"  Now, I am given a primer on "disruption":

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Disruption is a word that is not often associated with the building of a business. However, Clay Christensen, Professor of Business Administration at Harvard Business School, has written two groundbreaking books, The Innovators Dilemma, and The Innovators Solution, which persuasively show that disruption can indeed be the primary engine of growth. . . Disrupters use a very consistent formula to attack the incumbents in an industry by focusing on either their least profitable and over served customers, or on customers who are not served at all.

Hambrecht obviously believes that the auction IPO is a disruptive technology, but he also seems to be marketing the auction IPO to disruptive companies, who he says are "the lifeblood of our business."  Although Hambrecht's vision is nine years old now, this is the first time I've noticed this "disruption branding" on its website.  In fact, Professor Christensen has been talking about disruptive technologies for 15 years (according to wikipedia, at least), so why now?  Maybe because Professor Christensen has a new book on learning?

Well, I just heard the word on Monday, and I'm already tired of it.  Unless, of course, Professor Christensen wants to call my web-based citation exercises, The Interactive Citation Workbook (with Tracy McGaugh), a disruptive technology.  Then, I'm all for it.

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The "Bad Bank" was a bad idea, made worse by the fact that the Obama Administration should have known it was a bad idea. Henry Paulson realized last year that pricing troubled assets with a single buyer in the market was a non-starter.

Last month Lucian Bebchuk floated a proposal entitled How To Make TARP II Work, in which he suggested "establishing a significant number of competing funds that will be privately managed and dedicated to buying troubled assets." It's a great idea -- explained again in Forbes today -- and it seems to be getting some traction with the Obama Administration. (See W$J.)

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Every day in the newspaper there is a new story about some item that consumers recently identified as a necessity, but is being recharacterized as a luxury good in "these tough economic times."  One recent example that comes to mind is Sunday's NYT article on private K-12 education, but there are numerous examples everywhere.  Whether its travel or coffee or whatever, all discretionary purchases are up for grabs these days.

So awhile ago I was having a conversation with other law school professor-types, and someone suggested that the rankings will become a luxury good for law schools.  Yes, while budgets are flush, endowments rising and thousands clamoring to pay tuition, then funds can easily be directed to doing the many things that translate dollars into rankings.  Faculty hires, both for the student/faculty ratio and for the peer reputation category, seem to be endangered.  Leaves, light loads, sabbaticals to write for both faculty retention purposes and the peer reputation ranking also might be on the cutting board.  Should we hire the pricey scholar with the great reputation who wants a course load package commensurate with her value or someone cheaper who will cover the curriculum?  Should we spend money on scholarships to entice the higher LSAT/gpa applicants or use the money to retain staff?  Increase tuition for those who pay full freight to keep the hiring going?

We've generally articulated that increasing the rankings of a school was good for students because it raised the value of their degree in their marketplace.  Is this necessary or is this a luxury?  Do the dollars we spend work?  In looking at the rankings, one thing that seems to hold true is that the "peer reputation" score is very sticky.  Splashy hires, SSRN downloads, etc. seem not to budge this score much in the short term.  What does the future hold?

Don't get me wrong -- I've very much enjoyed being the type of law professor that fits the "rankings guru" criteria of a good hire -- blogger, writer, SSRN poster, etc.    I would certainly prefer for Illinois to rise in the rankings rather than fall, and I'm sure our alumni would, too.  I'm not ready for the rankings days to be over yet, either.  But I think those who promise rankings results are in need of a "recession-era" argument that redoubling efforts to improve rankings "in these tough economic times" is the wise course.

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Last summer, it was Hannah Montana. This summer, it's the Jonas Brothers!

Who said Provo has no culture?

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One of my favorite podcasts, in addition to banquet of delights contained the UChannel series (quite the array of luminaries there, and, uh, Jonah Goldberg), is EconTalk, which comes out once a week, takes about an hour, and gets a pretty good, if right leaning, set of guests.  If only they had more lawyers though!  Sunstein did one last year, and I'm happy to point you to Todd Zywicki in this week's episode.

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AIG comes back for more money so often that it's difficult to think of new things to say about the company.  Luckily, we have Larry Ribstein with some wisdom.  Do give it a look.

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One corporate governance change that is being tested on the TARP money recipients is "say on pay," or nonbinding shareholder referenda on executive compensation.  The SEC has released a Q&A that suggests that say on pay resolutions will be mandatory for those who didn't file their preliminary proxy materials before February 18th:

Question: EESA Section 111(e)(1), as amended, states that the TARP recipient "shall permit a separate shareholder vote to approve the compensation of executives." Does this mean that the TARP recipient only needs to permit a shareholder vote if it receives a shareholder proposal on approving executive compensation?

Says Corp Counsel: "Over 400 companies will now be doing "say-on-pay" this year!"  They think it's big, but though say on pay isn't really my area, corporate governance reform must be really difficult if nonbinding votes count as the cutting edge.  Still, maybe we have something of an experiment here; event studies await, I presume.

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