usclaw - USC Gould School of Law - University of Southern California

FE AT UR ES
CLEO
Recent Grad Sets Bar for Support with Gift to CLEO
Emily Yu k i ch ’99 says her $5,000 gift to fund student scholarships through the Center for Law, Economics and Organization (CLE O )
was more automatic response than premeditated action.
“My husband and I went to the Law School centennial dinner last year, and we saw the large plaque that lists donors
[of $5,000 or more] by class,” she says. “There was no entry for the Class of 1999. I said, ‘We need to do this.’ I’d always
known I wanted to support the Law School, partly because I had received a partial scholarship for my three years there.
For everything USC gave me — not just the scholarship but this whole world of opportunity — it doesn’t take a lot of
thought to see that you should give back .”
For Ms. Yu k i ch, that world of opportunity includes her position as an associate attorney with Fo l g e r, Levin & Ka h n ,
where she practices both transactional law and litigation. A native of Oberlin, Ohio, Ms. Yu k i ch was a Montessori teach e r
and, later, the executive director of a preschool in Boston before coming to USC in 1996. When she joined Fo l g e r, Le v i n
& Kahn in March 2000, her salary surpassed her expectations. “My firm raised its salaries for associates last year,” she says. “I wouldn’t have
had that windfall — much less my job — if it weren’t for USC .”
Her support for CLEO stems from her excitement about the center’s programs and plans for the future. She hopes her sch o l a r s h i p
support will encourage more women to enter the field of law and economics. “I have an affinity for new ventures,” she says. “And it’s
important to encourage women to enter those fields that they traditionally aren’t involved in — not just for women, but for the fie l d .”
She was also inspired by a quotation engraved on another plaque in the Law School’s lobby: “Generosity is like our morning and evening
shadows — long, and reaching places where we do not stand.” The notion that a gift can benefit students for years to come, she says, is
a powerful one.
“ That list of names gives a message to other graduates and to current and prospective students,” she says. “It says that people consider
the Law School a worthwhile cause. It shows that the school is a vibrant place, that people who come out of this school are successful, and
they feel it’s important to continue to support it. I wanted to get the ball rolling for my class. I hope my name is just the first of many.”
An Evolving Field
Ef f e c t i ve legal regulation of business re q u i re s
that policymakers correctly diagnose the pro b-
lems in need of resolution, and that they
c o r rectly anticipate how business will re s p o n d
to new laws. Law and economics scholars
b e l i e ve economic analysis of business organizations
can help regulators gain this
u n d e r s t a n d i n g .
O ver the past half-century, the economic
study of business organizations has undergone
at least two significant transformations.
In i t i a l l y, such analysis centered on the pre m i s e
that businesses we re motivated by the desire to
m a x i m i ze pro fits — and nothing more. Little
attention was paid to the internal workings of
an organization or the people who managed
it. Consequently, most early law and
economics scholarship focused on when and
h ow the law could regulate product mark e t s
and consumers through mechanisms such as
a n t i t rust and tort law.
During the mid-1980s, economists began
to re c o g n i ze that companies cannot necessarily
be assumed to be profit maximizing
entities that invariably do whatever is in their
own best interests. Rather, a company’s
behavior is determined by a multitude of individuals
— including shareholders, dire c t o r s ,
managers and employees — who each pursue
and are motivated by distinct interests. T h u s ,
to understand how a company would behave ,
economists theorized, it is necessary to understand
the incentives facing the individuals
who control it.
This insight held important implications
for the law: It implied that legal rules could
s e rve an important purpose not only in re g u-
lating arm’s-length market relationships,
but also in regulating relationships within
organizations themselves through employment
law, fiduciary law and corporate
g overnance ru l e s .
Still, this analysis of behavior within the
firm retained a standard assumption of
economic theory that presumes all individuals
make rational choices. Re c e n t l y, scholars
within both economics and cognitive
p s ychology have challenged this assumption
based on a rich body of psychological re s e a rc h
— and individual experiences — that suggests
people often do not behave in a strictly
rational way, and in fact tend to deviate fro m
the assumptions of rational-choice theory in
systematic and often predictable ways.
These insights have given rise to a third
w a ve of scholarship, behavioral economics,
which hopes to incorporate a more nuanced
model of human behavior into pre - e x i s t i n g
economic methodologies. When combined
USCLAW s p r i n g 2001
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