Professional works like the Lehman Report are a very much under-read and under-appreciated branch of literature. The same is true of County Court judgements, and the like. The judgements of higher courts, though sometimes beautifully written (Lord Denning being the most famous artist in this genre) are highly technical and all about the law. But in any kind of a commercial case, courts of first instance consider the facts and have to decide who is telling the truth. And because the very fact that a case has come to court presupposes that something has gone horribly wrong in a business transaction, their judgements are, not uncommonly, full of suspense and deadpan characterisation. I enjoyed Cembrit v Apex, which is ostensibly about a rather technical copyright matter arising out of a disaster with some roof tiles, but contains such passages as this:
On 18 November 2004, Construction News published an article which was critical of Cembrit UK and based upon the materials Mr Leader had supplied. Mr Leader was delighted and telephoned Mr Penrose to say he was "gleeful", that this was "just the start" and "I am going to get well rough from here on in". Not surprisingly, Mr Penrose explained that he found this tactic very unsettling.The fact is that mundane disasters about roof tiles are enormously dramatic to the people involved, and the things people do in response to this are all you need to generate drama.
The examiner in bankruptcy is not in the same position, but he rehearses the facts in much the same way. The Lehman report is on quite another scale, but it's still, at bottom, a tale of characters coming unstuck over time. Those unused to such things should just read the table of contents, which is 37 pages long and follows the elegant convention of whole sentences for headings, each summarising the paragraph it belongs to. But the quotes from all the emails are in the lengthy footnotes. You can get very lost in those.
At the other end of the scale, Felix Salmon has a story from Dean Jens illustrating the way a company of any size cannot behave in a coherent way, because what actually happens is limited by the powers of individuals trying to get things done.
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Personally I'm fascinated by the sheer size of the Lehman report. Thousands of pages. I'm bemused by the executive summaries too - I can understand one for the whole report, but each volume has one too!
Fascinating how little responsibility the board of directors had for the collapse (or would say they had). Lehmans was incorporated in Delaware. Under Delaware state law, if the senior management say to the directors that they are being "responsible" in their risk management, and fail to single out any issues, then the directors are under no obligation to check further. They have no personal or professional liability if the corporation goes belly up.
With such a huge document, of course, the problem is how to read it. Still even dipping in it's fascinating.
Well, the executive summaries are basically there so you can find the bit you're interested in without reading the whole thing - it's not like a novel where the author really cares whether you do or not. It's a functional document.
I suppose Delaware law is why they chose to incorporate there. However, the whole Repo 105 thing only works because some of the subsidiaries are under English law. But then in Volume 8 ("Narrative"), Fuld discovers that under English law, if you are a director of a company which you know perfectly well to be hopelessly insolvent, you can be held personally liable - i.e. it's YOUR money on the line - for its debts, under certain conditions. (Which turns out to be his personal definition of 'illegal'). That doesn't seem to have gone down too well.
Technically there's a lot going on, but if you have enough idea of context to be able to read it as a human drama, it's all about status, power, and the unwisdom of buying your own hype.
Yes I read a bit about the Repo 105s. They couldnt find any law firm in the US who would say what they were doing was legal. Any big firm, anyway :) But Linklaters said it was OK under British law. So all of those transactions then went through the UK subsidiary.
I wonder whether that was part of the reason why Lehmans New York scarfed all the money and left the UK operation penniless? I never did get to the bottom of that.
Also didnt get to the bit about UK insolvency law. Blimey - Volume 8? You've done well :)
Yeah, I thought the Linklaters bit was wierd as well so I checked with someone who knows, and the answer is that it's probably correct. You can't do that under US law, but it does technically work under the law of England and Wales. What Lehman were doing is obviously an abuse of that rule, but Linklaters are OK. Ernst & Young look a bit foolish, though.
I used the TOC to skip to the good bits ;)
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