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Measuring Clarity in Legal Text
Full text linkLegal cases often turn on judgments of textual clarity: when the text is unclear, judges allow extrinsic evidence in contract disputes, consult legislative history in statutory interpretation, and more. Despite this, almost no empirical work considers the nature or prevalence of legal clarity. Scholars and judges who study real-world documents to inform the interpretation of legal text primarily treat unclear text as a research problem to be solved with more data rather than a fundamental feature of language.
This Article makes both theoretical and empirical contributions to the legal concept of textual clarity. It first advances a theory of clarity that distinguishes between information and determinacy. A judge might find text unclear because she personally lacks sufficient information to decide which interpretation is best; alternatively, she might find it unclear because the text itself is fundamentally indeterminate. Fundamental linguistic indeterminacy explains ongoing interpretive debates and limits the potential for text-focused methods (including corpus linguistics) to decide cases.
With this theoretical background, the Article then proposes a new method to algorithmically evaluate textual clarity. Applying techniques from natural language processing and artificial intelligence that measure the semantic similarity between words, we can shed valuable new light on questions of legal interpretation.
This Article finds that text is frequently indeterminate in real-world legal cases. Moreover, estimates of similarity vary substantially from corpus to corpus, even for large and reputable corpora. This suggests that word use is highly corpus-specific and that meaning can vary even between general-purpose corpora that theoretically capture ordinary meaning.
These empirical findings have important implications for ongoing doctrinal debates, suggesting that text is less clear and objective than many textualists believe. Ultimately, the Article offers new insights both to theorists considering the role of legal text and to empiricists seeking to understand how text is used in the real world
The Neoclassical View of Corporate Fiduciary Duty Law
Full text linkTraditionally, corporate fiduciary duties are said to run to the corporation itself. But what does this mean? Something, this Article argues, that is quite different from what both shareholder and stakeholder value maximization proponents think. Specifically, the argument is that corporate fiduciary duties are owed not to any flesh-and-blood stakeholder, including current shareholders, but rather to a hypothetical permanent investor whose holding period is forever. Like any statement of corporate purpose, this “permanent equity maximization norm” is rooted in an underlying model of the corporation. In this case, the underlying model must be one that sees the corporation as a vehicle uniquely designed for long-term capital allocation and therefore emphasizes the corporation’s perpetual existence as the most important attribute for understanding its nature.
This interpretation of corporate fiduciary duties—what this Article calls the “neoclassical view”—does a better job than alternatives in explaining various puzzling features of corporate law, including the apparently conflicting focus on shareholder value maximization on the one hand and the reluctance, on the other, to hold corporate fiduciaries who engage in insider trading liable for common law fraud. It also explains the allocation of decision rights in the corporation, including why decision-making power is located in the board but also why shareholders have the right to bring derivative lawsuits and vote on certain matters. Under this view, the shareholder franchise is less about giving voice to shareholders and more about providing a tool the board can use at its choosing to generate information to help it in the difficult task of long-term capital allocation.
Perhaps the most important implication stemming from this neoclassical view of corporate fiduciary duty law is that, although a corporation deals in contracts, the corporation itself is not a creature of contract, and corporate law is not necessarily contractarian as a fundamental matter. Rather, the corporation represents a policy decision to create an entity designed for extreme long-term capital allocation without sacrificing a liquid securities market. More generally, this analysis demonstrates that the concern over “short-termism” in the corporation is not simply a passing fancy but rather is deeply embedded in fiduciary duty law and lies at the core of what a corporation is
Borders that Bend
Full text linkBorders do not exist. They are made and remade. At every step, the law creates, moves, reforms, reproduces, and reinforces the border. Focusing on the boundary that México and the United States share, this essay critiques the U.S. Supreme Court’s privileging of the sovereign prerogative to control access to the nation’s territory. In their efforts to control movement across and near the border, legal doctrine permits Executive officials to deviate from ordinary legal constraints on the use of violence. This creates a modern version of the sovereign that Carl Schmitt described a century ago: extra-constitutional in origin and subject to law only on its own terms. Urging an end to the law of border exceptionalism, the essay argues that the Schmittian sovereignty that exists in the borderlands is neither justified by the facts on the ground nor required by the very legal principles that the Supreme Court points to
Law School Record, vol. 70, no. 2 (Spring 2024)
Full text linkMessage from the Dean Geoffrey Stone Marks a Half Century Teaching Fostering Free Expression Modernizing Federal Regulatory Review Q&A with Mary Smith, ’91 The Deans Collection Clinic Helps Effectuate $50M Affordable Housing Development Around the Law School Faculty News : Recent Faculty Books Recent Books by Alumni Development News In Memoriamhttps://chicagounbound.uchicago.edu/lawschoolrecord/1155/thumbnail.jp
Vertical Integration and Market Foreclosure in Media Markets: Evidence from the Chinese Motion Picture Industry
No full textThis paper investigates the impact of vertical integration and market foreclosure in media markets. Using theater-movie-day-level data from China, we show that integrated theaters charge lower prices, enjoy higher attendance, allocate more screenings, and run their own movies longer than movies of other distributors. Despite these differences, there is no evidence consistent with anticompetitive input and customer foreclosure in integrated theaters. On the one hand, integrated and independent theaters screen the same share of integrated and independent movies. On the other hand, revenue differences between continued theater-owned movies and discontinued independent movies are inconsistent with customer-market-foreclosure motives given existing differences in distribution incentives between integrated and nonintegrated structures. Finally, we estimate a random-coefficient discrete-choice model of movie demand and show that integrated theaters deliver a higher level of utility with integrated movies than with independent movies through the direct effects of lower prices and more screenings
Do Companies Care about Judicial Ideology? Evidence from Air Pollution
No full textWe examine the relationship between the judicial ideology of the local federal circuit court and companies’ plant-level air pollution. Environmental litigation in Republican-leaning circuits is less likely to produce outcomes favorable to the plaintiff. Consistent with firms forming expectations based on the belief that Republican-appointed judges are more likely to side with firms, plants emit more air pollutants that are not explicitly covered by the Clean Air Act if the local circuit court has more Republican judges. The results are weaker for chemicals covered by the Clean Air Act, which suggests that greater regulatory certainty reduces judicial flexibility. To provide a causal argument, we examine the deaths of judges and find that those during Republican presidencies are associated with 5.6 percent greater emissions of non–Clean Air Act chemicals
Cover-Ups
No full textLengthy cover-ups are a repeated feature of the organizational landscape. This paper studies executives’ optimal cover-up strategies given the penalties and the evolving beliefs of strategic outside parties who investigate malfeasance. The analysis shows that organizational self-policing and external investigation are strategic substitutes in any given period. Over time, successful cover-ups increase the incentive to cover up, and changes in the current environment, such as an increased awareness of the harmful effects of the employee’s actions, can result in a reduction in cover-ups in the short term but an increase in the long term. We analyze how fines for executives and rewards for investigators affect the welfare of different stakeholders. We extend the model to study two alternative prosecutorial regimes: a prosecutor who can commit to an investigation policy and a long-lived prosecutor who internalizes the impact of their early decisions on a subsequent prosecutor’s incentives
The Economic Consequences of Hedge Fund Regulation: An Analysis of the Effect of the Dodd-Frank Act
No full textThis paper exploits registration data administered by the Securities and Exchange Commission to examine the effect of the Dodd-Frank Act on profitability, risk-taking, and capital formation in the hedge fund industry. The data show that after the act was implemented, there was a significant decline in investors’ profitability that can be at least partially attributed to direct compliance costs. However, compliance costs do not fully explain the results: part of the decline seems to be driven by collateral effects of compliance, particularly the diversion of managerial attention from core business activities and/or adjustments to financial valuation or reporting practices. The data also show that risk-taking did not change significantly and that although managers closed funds and launched fewer funds in response to the law, this behavior did not result in lower assets under management
Brazil’s Role in Global Climate Treaties
No full textSince the 1992 United Nations Conference on Environment and Development, Brazil has asserted an influential role in shaping international climate change treaties. The purpose of this paper is to assess Brazil’s contributions in three major climate conferences: 1992 in Rio de Janeiro, 1997 in Kyoto, and 2015 in Paris. Brazil’s negotiating strategy at these conferences reveal two powerful tactics. First, Brazil approached these political events with a view that science and technology were paramount. Second, Brazil successfully injected economic development priorities into environmentally focused negotiations. These two noteworthy tactics have shaped the climate change diplomatic discourse for the past three decades and will continue to influence future diplomatic agreements on climate change
