The scam what am

If you want to witness the interesting spectacle of my going from a fairly mild mannered, motherly lawyer type, to a screaming, foaming-at-the-mouth harridan, mention one acronym:  MCLE.  This stands for Minimum Continuing Legal Education, which I found an inconvenience when I was a big firm attorney and that I find an economic and time burden now that I’m a solo.

Continuing legal education did not used to be a mandatory requirement for practicing law in California.  When I started out as a lawyer, legal organizations and legal publishers would put together seminars and send out fliers in the hopes that lawyers would attend.  Often lawyers did attend because the seminars involved the lawyer’s practice area, and they promised to be interesting or to give the lawyer an edge professionally.  Lawyers took the classes on a strictly as needed basis, so that a lawyer who was just plodding along in a single area, reading the cases as they came out and churning through relatively uninteresting legal cases, might attend one seminar a year.  For example, a litigator might attend an annual half day seminar on new pretrial procedures.  (Or he might just read the new legislation emanating from Sacramento every year, or check the update to his favorite legal treatise, which would spell out all of the new procedural requirements.)

Then, in the late 1980s, the California State Bar suddenly announced that, if lawyers want to keep their licenses, they were required to take 36  hours worth of seminars over a three year period (a requirement since lowered to 25 hours over the same three years).  Not only that, but lawyers couldn’t just take classes in areas that might benefit them as practitioners.  Instead, they also were (and are) required to take several hours of classes in law practice management, legal ethics (which could theoretically help some lawyers out there), substance abuse, and identity politics — oh, sorry, that last should be “Elimination of Bias.”

I had a problem with this whole thing from the get-go, because I like the idea of self motivated self-improvement, not coercive, government mandated improvement (proving that I was a nascent conservative long before I knew it).  I also recognized immediately that the whole thing was a scam.  How?  Because it was set up so that the big firms didn’t have to dig into their pockets to fund their associates and partners for these seminars.  Instead, the big firms could create their own in-house seminars, something that often boils down to some long-winded partner bloviating for an hour about a case, while a captive audience of fellow firm attorneys sucks down caffeine in an often vain effort to stay awake.  Of course, for attorneys without big firm backing, the self-help route was (and is) unavailable.  The only option was (and is) to put your own money on the line for outside MCLE sources.

Now, there are some superb seminars out there.  One wonderful day, I attended Bryan Garner’s incredible legal writing seminar.  But you know what?  I would have been desperate to take that seminar anyway, without the necessity of government coercion.  I learned more in six hours with Bryan Garner than I had in the previous 15 years of practice — including attending other, much cheaper writing seminars.

And oh!, have I attended lots and lots of cheap seminars.  You see, if you don’t have a lot of money to play with, you don’t go to quality seminars of the type that were always offered, even before the mandatory MCLE program — seminars that could actually be useful or, at least, interesting (such as the aforementioned Garner seminar).  Instead, you hunt around for el cheapo seminars, regardless of whether the subject matter is relevant to your practice area.

There was a boom of these el cheapo seminars immediately after MCLE became mandatory, although prices only dropped with the internet.  In pre-internet days, a small firm attorney had to pay $200 to go waste some time listening to someone waffle on for a few hours about the fact that women and minorities are inevitably victims of large firm practice — unless those firms are women or minority owned.  Now, through the miracle of the internet, a lawyer can spend a mere $129 to get all required hours.  But if you think there’s any learning involved, you don’t know how to work the system.  You can read the material, of course, but it’s banal and self-evident.  So, you might be tempted to try a shortcut (not that I ever would, of course).  For example, if you have a large monitor you might, in one screen, open the essay about corporations or substance abuse or some other subject that doesn’t mesh with your practice needs.  In the other window, you could open the 4 question on-line questionnaire.  Then, using word search in the essay, you match the sentence in the essay with the question, and there’s the answer.  It’s theoretically possible to do 5 hours of MCLE in under 20 minutes.

What motivated me to blog about this scam — which has been a burr in my butt for almost two decades — is a segment in Jonah Goldberg’s Liberal Fascism: The Secret History of the American Left, From Mussolini to the Politics of Meaning, about the anti-competitive effects of government regulation of business — and about the fact that businesses, that is, big businesses, are often happily complicit in this regulation since  it benefits them so much:

Consider, for example, the largely bipartisan and entirely well-intentioned Americans with Disabilities Act, or ADA, celebrated everywhere as a triumph of “nice” government.  The law mandated that businesses take a number of measures, large and small, to accommodate customers and employees with various handicaps.  Offices had to be retrofitted to be wheelchair compliant.  Various public signs had to be written in Braille.  Devices to aid the hearing impaired had to be made available.  And so on.  [And on and on as enterprising customers, employees, students and lawyers providing an ever expanding and often quite imaginative list of what constitutes a “handicap.”  They’re rational to do so, too.  If there’s a trough, you’d be a fool not to feed at it.  –Ed.]

Now imagine that you are the CEO of Coca-Cola.  Your chief objection to this law is that it will cost you a lot of money, right?  Well, not really.  If you know that the CEO of Pepsi is going to have to make the same adjustments, there’s really no problem for you.  All you have to do is add a penny — or really a fraction of a penny — to the cost of a can of Coke.  Your customers will carry the freight, just as Pepsi’s customers will.  The increase won’t cost you market share, because your price compared with the competitor’s has stayed pretty much the same.  Your customers probably won’t even notice the price hike.

Now imagine that you own a small, regional soft drink company.  You’ve worked tirelessly toward your dream of one day going eyeball-to-eyeball with Coke or Pepsi.  Proportionally speaking, making your factories and offices handicapped-friendly will cost you vastly more money, not just in terms of infrastructure, but in terms of the bureaucratic legal compliance costs (Coke and Pepsi have enormous legal departments; you don’t).  [And I have several lawyer friends who have made a good living providing ADA advice to innocuous small businesses that suddenly discovered that they needed to make a lawyer part of their budget so as not to run afoul of the feds. -Ed.]   Plans to expand or innovate will have to be delayed because there’s no way you can pass on the costs to your customers.  Or imagine you’re the owner of an even smaller firm hoping to make a play at your regional competitors.  But you have 499 employees, and for the sake of argument, the ADA fully kicks in at 500 employees.  If you hire just one more, you will fall under the ADA.  In other words, hiring just one thirty-thousand-dollar-a-year employee will cost you millions.

The ADA surely has admirable intent and legitimate merits [and maybe MCLE does too, although I always assumed it was due to lobbying by MCLE providers.  –Ed.].   But the very nature of such do-gooding legislation empowers large firms, entwines them with political elites, and serves as a barrier to entry for smaller firms.  Indeed, the penalties and bureaucracy involved in even trying to fire someone can amount to guaranteed lifetime employment.  Smaller firms can’t take the risk of being forced to provide a salary in perpetuity, while big companies understand that they’ve in effect become “too big to fail” because they are de facto arms of the state itself.  (pp. 306-307.)

You can understand why the above language resonated so strongly with me.  I guess the last word on this subject, both vis a vis MCLE and ADA should go to an old saying:  The road to Hell is paved with good intentions.

Legislating to the fringe

I’ve been researching the Legislative history of a California statute enacted 30 years ago. The statute affected how insurance companies could conduct investigations that would determine their risk in issuing a given policy. At that time, insurance companies would conduct personal interviews with neighbors and colleagues, with the results stored away in files. A secondary industry sprang up which, for a fee, would conduct those same interviews and sell the results to the insurance companies, landlords and employers. Inevitably, there were abuses, with people being dogged by the fallout from inaccurate reports. The Feds stepped in 1971 (and again in 1973) by enacting the Fair Credit Reporting Act, which allowed people to contact the credit bureau or other investigative agency for a summary of the file contents. Again, there were abuses, with stories of investigative agencies inaccurately summarizing the file contents.

In 1975, one California man had a horrific experience: he was a former Naval man, with an impeccable record, who suddenly found himself unemployable. Eventually, he discovered that he was a victim of identity theft: someone had stolen his wallet, and the thief had set out living a life under the name of his victim. The problem for the victim was that he didn’t realize what the problem was. Employers did not advise him that they were consulting these investigative agencies as a prerequisite to his employment, and he kept getting bland rejections that did not alert him to the identity theft. Once he knew, he immediately relied on his federal right to get a summary of the file.

A California legislator decided to fix the problem this victim experienced by requiring companies to make all the details of the reports fully available to the consumer, although companies could block out the identity of the individuals who were interviewed and provided information that went into the reports. The proposed legislation also placed controls on how the report could be used, and created substantial penalties against companies that violated these new rules. And so, the California Investigative Consumer Reporting Agencies Act (“ICRAA”) came into being. It’s since been amended to require that companies affirmatively notify individuals that the company intends to obtain the report, and to add a few other, less interesting, legislative massages. For the most part, I don’t think any of us would quibble with it. We like feeling that people aren’t building huge and possibly false histories about us that affect everything we do. We live in such a data saturated society that it’s nice for the consumer to feel he’s having a bit of control over the whole thing.

Nevertheless, reading the Legislative history was eye opening in that it was a chance to see what I call “legislating to the fringe” — that is, taking a problem that, at that time, affected a very small number of people, and turning into a vast procedural burden on American business. The ICRAA history shows these downsides of the Legislation in the form of fervent opposition letters insurance companies and investigative agencies sent to the California legislature.

For example, the President of the Underwriters Research Bureau crafted this beautiful paragraph:

When selective underwriting can no longer be practiced, then the day will have come when the worthy and deserving, hard-pressed insuring public, already groaning under the financial burdens of insurance payments, will be lumped together with the irresponsible, high-exposure segment of our driving society. The man who can withstand the cursory investigation made of him and, who, by investigation, seems to be a good, ordinary, average risk, must, without investigation, pay the price for his opposite.

Another representative for the insurance interests, baulking at the new rules layered onto the investigation practices the industry used at the time, in language one can never imagine be written today, wrote this semi-literate, but still powerful screed:

By forcing us to provide a copy of the report to the consumer and losing our immunity this would force us out of business and a lot of employees and your constituents would be out of work. Rates would automatically rise because we would be paying higher rates due to that minority your bill is protecting. The “habitual drinker”. I don’t mind paying for my share of someone’s insurance claim for using “faulty judgment” and getting into an accident but not someone who wilfully [sic] drinks. I wouldn’t mind paying my share for a fair rate for fire insurance because of fires that happen after the insureds have taken normal precautions but I will be damned if I will pay for those who practice poor housekeeping with debris and old mattresses placed against their residences.

These are the people A.B. 601 is protecting and making immune from penalties.

Now, one might be tempted to say that this is just big business looking out for itself, it it weren’t for the fact that the Legislative history shows that the problems — and there were problems — were limited to a fringe of bad behavior. One federal agency head, testifying before Congress in connection with the federal act, told of a carpenter who moonlighted as an investigator, and found it was more remunerative to make up information for the files than actually engage in any investigating. And as I noted above, the California legislator who brought ICRAA into being focused his anecdotal evidence exclusively on that one poor victim of identity theft. The California Department of Consumer Affairs supported the initiative by citing to a single study:

A recent Harris Poll indicates that 75% of the American public polled is concerned about the kind of personal information credit reporting companies collect, and 28% of those polled believe they have been victims of misleading, damaging, or incorrect information stored in credit bureau files.

In other words, the Department of Consumer Affairs is pushing for a huge burden on business because people are “concerned” and 28% “believe” they have been victims of bad information. The latter number is especially unimpressive, because the poll doesn’t delve into what percent of that 28% actually was a victim of bad information, as opposed to simply resenting that a bad credit history was exposed.

On the other side, as I discovered from reading more correspondence, it turned out that the investigative agencies were not unpoliced. The president of one investigative service noted that his files had repeatedly been vetted by a government agency as part of ordinary spot checks and were found to be perfect — no errors, either intentional or unintentional. In other words, his company did its job correctly, and policing proved that to be the case. He was concerned, though, that the new legislation, which would open up files to consumers, would make it impossible for him to obtain information from percipient witnesses. Businesses would thus lose the type of information that had allowed insurers, landlords and employers to make rational risk-based pricing (and other) decisions.

The protests from industry types were to no avail, and the bill was passed. It has since been amended to expand consumer rights.

As I said, as a consumer, I don’t have a huge problem with knowing that I can get access to information about me, nor am I upset that businesses have to tell me that this information is out there, that they are requesting it, or that they will rely on it. The lessening of information probably has driven up insurance and rental costs, but I can balance that against my piece of mind . . . or can I?

You see, I’ve been thinking for a long time about the way in which so much Legislation, much like ICRAA, is driven by the needs of a few, rather than the needs or concerns of many. The government is very willing to hand out rights if there’s no direct cost to the government, but the costs are nevertheless real: for businesses to comply with all these notice requirements is expensive, and when business cannot get accurate information for decision making, it will pass possible risks on to the general public in the form of higher costs all around.

The particular bee in my bonnet when it comes to legislating to the fringe is the Americans with Disabilities Act. In theory, it sounds like a wonderful idea — making equal opportunities open to the disabled among us. In practice, though, it’s often become ridiculous, imposing huge costs on the general public, making business expensive, and enticing people into ridiculous positions to benefit from the Act. I’ll give three examples:

Huge costs on the general public: Our neighborhood successfully convinced the local government to place crosswalks at our intersection, because of the number of children crossing that street. We actually had a hard time understanding why the town was so resistant to our request, since we had just envisioned painted lines across the street, and maybe putting up some stop signs. What we hadn’t realized is that ADA requires that, wherever a cross walk is installed, a wheel chair ramp must also be built. In other words, our simple request meant three days of non-stop work, with diggers destroying the existing curbs, and cement trucks pouring new curbs with ramps. It looks great.

While I’ve never seen a wheelchair in our neighborhood, there are lots of people with baby strollers, in theory, they benefit from this new construction. However, the ridiculous thing about the new ramps, given the way the corners relate to the houses, is that there are already existing driveway ramps within 10 feet of each of these wheel chair ramps. In other words, our intersection now has eight ramps abutting each other and leading into the street. I think the whole thing cost the town (read: the taxpayers) $40,000.

Making business prohibitively expensive: When I used to work in downtown San Francisco, there was a great, little, old restaurant on the second floor of an old building. There was no wheelchair access (i.e., no elevator), so the building lost any customers who could not claim the stairs. When the town got wind of that, it ordered the restaurant to install an elevator or go out of business. The cost of installing a wheelchair accessible elevator in this old building was $250,000. The restaurant couldn’t possible pay this, so it went out of business.

Now, some might say that it serves the restaurant right for discriminating against the handicapped, but some might say that it’s awful that an old, respected restaurant was forced out of business because a minuscule percent of the population could not take advantage of it. Indeed, the same logic that drove the restaurant out of business could be used to say that all 5 star restaurants should be done away with, because poor people are discriminated against by being denied access to their pricey food — and I’m sure that, one day, someone will say that.

Other examples of expenses or irrational behavior imposed against businesses are the problems that arise when support people working at large corporations — people who usually work in the internal offices — claim claustrophobia as a way to demand corner offices. I’ve seen this done more than once and the businesses have usually caved, precisely because of the penalty risks under ADA.

Enticing people into ridiculous positions: The last example of ADA demands run amok that I gave — the claustrophobia example — is also a good way to demonstrate how the Act has been manipulated to expand its rights to more and more people. Most of us, when we think of ADA, think of people with obvious and manifestly limiting handicaps: people who are blind, or who use wheelchairs or crutches, or who are deaf, or who have profound mental disabilities. Frankly, I think it’s good business and ordinary humanity to look out for and aid them.

Others, however, look at the act and see a green light to take their itches and twitches, and make something out of them. The most discussed “creative” use for ADA (aside from getting a corner office) is the one that sees exam takers claim an invisible disability to get extra time on the test. I’ve known people with cerebral palsy or blindness who take less time than some of these people claiming “testing phobia.” Frankly, I can’t blame anyone who does this. The Act is an open invitation to this kind of fraud.

I know I sound harsh and crude and unforgiving, but the fact is that something like the ADA, which removes human discretion and replaces it with an overarching government “right”, is simply a green light for people who, George Washington Plunkitt style, see their opportunity and take it. So an act that was humanely meant to benefit a fairly small minority of people, people with genuine disabilities that we would all acknowledge as such, has morphed into a huge industry, one that contains no direct costs to government, but that creates passed-on costs at every level; that robs people in business and government of discretion to examine things on a case by case basis; and that encourages dishonesty to take advantage of a new, Legislatively created right.

We all like rights. We all like to solve problems. We all want to help people at a disadvantage. Nevertheless, I think we do need to think long and hard about Legislation that purports to give rights, to solve problems, and to help the little folk, but that instead creates hidden costs and inconveniences that are far more burdensome than the original, fairly small-scope problem that was meant to be solved.

UPDATE: It seems appropriate here to note that this is the 50th Anniversary of Ayn Rand’s celebration of American business people. (h/t: Michelle Malkin)

UPDATE II:  Here’s another example  that just came out today of a private citizen rationally using the rights granted under ADA to have taxpayers pay for something he’s perfectly capable of paying for himself — and the U.S. Supreme Court has announced that this principle should apply to all:

New York City must pick up the tuition tab for a multimillionaire TV executive who sent his son to private school because he felt the public system didn’t offer a good enough special education program, the U.S. Supreme Court said today.

The justices’ decision upholding a lower court ruling potentially could affect thousands of special ed students around the country – and put a dent in the pockets of public school systems nationwide.

The justices split 4-4 on the case, with Justice Anthony Kennedy not participating. That means a lower court ruling siding with Tom Freston, former Viacom CEO and one of the founders of MTV, remains in place.

Freston, who walked away with a $75 million payout when he was ousted from Viacom in 2006, could easily have paid his son’s tuition, but he maintained he was fighting for a principle.

“Children with special education needs have a right, without jumping through hoops, to attend schools capable of providing them with an education,” he said in a statement when the case was argued before the high court on Oct. 1.

On the one hand, it’s a wonderful victory for parents of genuinely disabled students who are being destroyed in adequate public schools that are not capable of handling these students, and who cannot afford better schools that would serve their children’s special needs.  I know at least two families who could reasonably and appropriately benefit from this ruling.

On the other hand, the ruling seems (a) unfair to people whose ordinary kids are stuck in poor performing public schools, but have no way out and (b) like an incentive for the families of these ordinary kids to start painting the children as damaged in order to get the benefit of this plan.  (The bill is probably going to be a windfall for “experts” who, for a fee, will paint any child as disabled.”  Again, individual discretion is going out the window in favor of a large government mandate with no direct cost, but with plenty of hidden costs, so taxpayers had better start hiding their money under mattresses.