On Monday, the Supreme Court announced the adoption of a new code of conduct for the justices. The document is 14 pages (with the Code laid out over nine) and includes five cannons of conduct on topics ranging from what kind of activities the justices can engage in, to when they must recuse themselves from a case. This is the first time in history that the Supreme Court has adopted its own ethical Code.

In a statement, the justices said that principles in the Code are not new. However, the Court wants to ensure the public that it is committed to ethics. This announcement comes in part due to recent public scrutiny of the highest Court’s ethical behavior. The Code’s introduction states that a lack of a published code “has led in recent years to the misunderstanding that the justices of this Court, unlike all other jurists in this country regard themselves as unrestricted by ethics rules.”

Where does Supreme Court scrutiny stem from? Let’s get into the details.

Ethical Controversies Surrounding Supreme Court Justices

Recent media attention has highlighted ethical controversies involving Supreme Court Justices, raising public concern about their adherence to ethical standards. Notable incidents include Justice Clarence Thomas’ delayed disclosure of trips funded by billionaire GOP donor Harlan Crow and his wife Ginni Thomas’ involvement with Trump-allied lawyer John Eastman, linked to attempts to overturn the 2020 election outcome.

Additionally, Thomas faced criticism for not disclosing Crow’s funding for his great grandnephew’s private school education. Justice Samuel Alito also came under scrutiny for not reporting a fishing trip with Republican donor Paul Singer, who had cases before the Court. Similarly, Justice Sonia Sotomayor was questioned for using court staff to organize book tours, a task seen as beyond a clerk’s duties.

Amidst these controversies, public approval of the Supreme Court has plummeted. In response, Justices Amy Coney Barrett, Elena Kagan, and Brett Kavanaugh publicly advocated for a specific code of conduct for the Court. This, combined with public pressure and growing concern over judicial ethics, led to the announcement of a new ethics code for the Supreme Court.

Supreme Court Code of Conduct Highlights

The Supreme Court’s Code of Conduct clarifies that the rules inscribed are not new but rather a collection of principles and laws that the Court already follows. The Code begins with the statement: “The undersigned Justices are promulgating this Code of Conduct to set out succinctly and gather in one place the ethics rules and principles that guide the conduct of the Members of the Court.”

Principles specific to the Supreme Court include that the Justices should not engage in public speaking or fundraising for political events or situations that promote commercial products. In fact, Cannon 5 states that Justices should refrain from political activity. It states that Justices should not act as leaders in political organizations, make speeches for a political organization or candidate, and, finally, justices should not solicit funds or contribute to political organizations or candidates.

Another pertinent part of the Code defines a Justice’s family member. It states, “A member of a Justice’s family means any relative of a Justice by blood, adoption, or marriage, or any person treated by a Justice as a member of the Justice’s family.”

The Commentary at the bottom of the Code goes into detail regarding recusal. Recusal is situated under Canon 3 of the Code, which discusses when a Justice should disqualify themselves from a case. However, the Code clarifies that “the rule of necessity may override the rule of disqualification.” Regarding recusal, the Code Commentary states, “Because of the broad scope of the cases that come before the Supreme Court and the nationwide impact of its decisions, this provision should be construed narrowly.”

The Justices make clear that the Supreme Court differs from lower courts because in lower courts if a judge recuses themselves, they are replaced by another judge. This is different at the Supreme Court level. If a justice recuses themselves, it could have a severe impact on the outcome of a case that has a nationwide impact because the justice’s are not replaced.

The Commentary states that the Code is “tailored to the Supreme Court’s placement at the head of a branch of our tripartite governmental structure.” Meaning, its rules are slightly different from lower courts by nature of it being the highest court in the land.

The Code highlights essential ethical duties that all Justices must abide by. It is a step in the right direction in swaying public opinion that the Supreme Court is held to ethical standards just like all lower court jurists. However, the Code has faced harsh criticism because it does not contain any enforcement mechanism.

No Enforcement Mechanism

Since its announcement on Monday, the Code has faced backlash from the public, media, and legal community. Many argue that the Code has no enforcement mechanism and, therefore, people question how much weight it carries if there is no mechanism to hold the Justices accountable if they commit ethics violations.

Critics argue that “the biggest omission is the glaring absence of accountability.” One writer for the Washington Post stated this is a code of “‘you’re not the boss of me’ –an approach that would be more tolerable had some justices not already proved themselves to be tone-deaf and negligent, or worse, [not] complying with the rules.”

Many argue that the Court needs to strike a balance between safeguarding independence and being held accountable for ethics violations. Without an enforcement mechanism, this may prove difficult.

There have been suggestions to create a panel of judges or retired jurists “who could examine ethics complaints and compliance issues.” Another recommendation is to have the Justice Department have an inspector general oversee ethics complaints and investigate violations.

Some experts in legal ethics gave the documents measured approval. A law professor from the University of Virginia stated it was “a small but significant step in the right direction.” Another ethics professor at the Washington University of St. Louis said, “it’s good that they did this…that they feel some obligation to respond to public criticism…”

The implementation of a Code of Conduct at the Supreme Court represents a significant step for the justices. Although the move comes amid ongoing public discussions about the need for enhanced ethical standards within the Court, it indicates a recognition of the importance of maintaining and demonstrating ethical integrity at the highest judicial level.

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Sources:

https://www.supremecourt.gov/about/Code-of-Conduct-for-Justices_November_13_2023.pdf

https://www.npr.org/2023/11/13/1212708142/supreme-court-ethics-code

https://www.nytimes.com/2023/11/13/us/politics/supreme-court-ethics-code.html

https://www.washingtonpost.com/opinions/2023/11/14/supreme-court-ethics-code-clarence-thomas/

https://www.nbcnews.com/politics/supreme-court/supreme-court-code-of-conduct-rcna124951

https://www.npr.org/2023/08/31/1196993118/justices-thomas-alito-financial-disclosures

https://www.reuters.com/legal/government/column-justice-thomas-rare-recusal-was-an-attempt-damagecontrollittleelse20231024/#:~:text=The%20justice%20participated%20despite%20the,by%20the%20January%206%20committee.

https://www.cbsnews.com/news/ginni-thomas-john-eastman-jan-6-correspondence-emails/

https://www.washingtonpost.com/national-security/2022/06/15/ginni-thomas-john-eastman-emails/

https://news.gallup.com/poll/509234/supreme-court-approval-holds-record-low.aspx#:~:text=Line%20graph.,a%2042%25%20reading%20in%202005.

https://www.washingtonpost.com/politics/2023/09/07/justice-kavanaugh-ethics-supreme-court/

https://www.propublica.org/article/clarence-thomas-harlan-crow-private-school-tuition-scotus

https://www.washingtonpost.com/politics/2023/05/04/clarence-thomas-tuition-harlan-crow/

On October 30, 2023, President Biden issued the Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence. Spanning over 100 pages, this is the most comprehensive set of guidelines on AI issued by the United States government. The executive order is designed to provide a framework for the responsible development and implementation of AI.

The main themes of the executive order include finding ways to develop safe and secure AI while also protecting citizens’ privacy, worker’s rights, and civil rights. It aims to create directives that foster an open market for AI development competition while safeguarding national security and preventing the spread of false information. Finally, the order compels government agencies and private companies to label AI-created content so that users can differentiate between AI and human-created content.

The Executive Order comprises eight guiding principles with recommendations impacting government agencies and private corporations. Let’s get into the details.

Guiding Principals

1. AI Must Be Safe and Secure

This principle is intended to create standardized evaluations of AI systems and create policies and mechanisms to test AI and mitigate risks before these systems are used. “Testing and evaluations, including post-deployment performance monitoring, will help ensure that AI systems function as intended, are resilient against misuse or dangerous modifications, are ethically developed and operated securely, and are compliant with applicable Federal laws and policies.” The goal here is also for Americans to be able to determine when content is AI-generated and provide a foundation that addresses AI risk.

2. AI Must Promote Responsible Innovation and Competition

The Biden Administration wants the US to lead in the development and implementation of AI. This guiding principle aims to unlock AI’s potential to solve society’s most complex challenges, such as healthcare, education, and national security. It seeks to balance the investment in AI-related education, development, and research while creating laws that tackle novel intellectual property questions to protect inventors and creators. “The Federal Government will promote a fair, open, and competitive ecosystem and marketplace for AI and related technologies so that small developers and entrepreneurs can continue to drive innovation. Doing so requires stopping unlawful collusion and addressing risks from dominant firms’ use of key assets such as semiconductors, computing power, cloud storage, and data to disadvantage competitors.”

3. AI Must Not Harm American Workers  

“The responsible development and use of AI require a commitment to supporting American workers. As AI creates new jobs and industries, all workers need a seat at the table, including through collective bargaining, to ensure that they benefit from these opportunities.” This principle aims to protect workers from the implementation of AI so that it does not undermine rights, worsen job quality, encourage undue worker surveillance, lessen market competition, introduce new health and safety risks, or cause harmful labor disruptions.

4. AI Policies Must Be Consistent with Protecting and Advancing Civil Rights

Here, the Biden Administration is emphasizing the fact that AI cannot be used to disadvantage those already denied equal opportunity and justice. This principle wants to build on steps that have already been taken, such as implementing an AI Bill of Rights so that AI can improve quality of life –not make things worse. AI must comply with all federal laws to ensure “technical evaluations, careful oversight, engagement with affected communities, and rigorous regulation.” There must be AI accountability and standards to protect against “unlawful discrimination and abuse, including in the justice system and the Federal Government.” Americans must be able to trust AI to advance civil rights –not diminish them or be used to further discrimination.

5. American Consumer Interests Must Be Protected from AI Abuse

This principle is focused on Americans who use AI in their everyday lives. The Administration seeks to warn AI companies that technological advancement does not preclude organizations from their legal obligations and that “hard-won consumer protections are more important than ever in moments of technological change.” Emphasis on protections in healthcare, financial services, housing, education, transportation, and law are paramount. The Administration aims to use AI to protect existing infrastructure while at the same time protecting consumers, raising the quality of goods and services, and lowering prices.

6. Privacy and Civil Liberties Must Be Protected from AI Advancements

As AI continues to advance, it is paramount that Americans’ privacy and civil liberties remain protected. AI capabilities make it easier “to extract, identify, link, infer, and act on sensitive information about people’s identify, locations, habits, and desires,” which increases the risk of personal data being exposed and exploited. The Biden Administration seeks to curb that risk by implementing laws to protect against illegal data collection and unauthorized retention of confidential information. The concern here is to protect against the improper collection of data and the “chilling” effect AI can have on First Amendment Rights.

7. AI Must Be Used Responsibly by the Federal Government

“It is important to manage the risks from the Federal Government’s own use of AI and increase its internal capacity to regulate, govern, and support responsible use of AI to deliver better results for Americans.” The Administration wants to ensure that members of its workforce receive adequate training to understand the benefits and risks of AI. The principle is aimed at creating technological infrastructure that provides AI that is safe, secure, and legally implemented by officials.

8. The United States Should Lead the way in AI Technological Processes

The Biden Administration wants the United States to be at the forefront of AI innovation and technological advancement. The United States has previously been a leader in technological progress in “eras of disruptive innovation and change” (like the creation of the internet), and the Biden Administration wants to continue this. The United States will “engage with international allies and partners in developing a framework to manage AI’s risks, unlock AI’s potential for good, and promote common approaches to shared challenges.” The Federal Government aims to promote responsible AI safety and security principles throughout the international community. 

Limits of the Executive Order

The AI Executive Order is a necessary step in implementing laws and regulations to foster AI development while protecting consumers from risk. However, the executive order is intended to provide guidance rather than legislation. Congress and government agencies will be responsible for creating laws to regulate, protect, and promote the use of AI. The Executive Order is an excellent start at laying the foundation.

Still, our government must work at implementing laws and policies surrounding the use and development of AI. Technology advances faster than the law, so while Biden’s executive order goes beyond previous US government attempts to regulate AI, “it places far more emphasis on establishing best practices and standards than on how, or even whether, the new directives will be enforced.” The law must catch up to AI technology, as we have already seen the negative implications of AI played out in the media and the courts.

Global Response to the Executive Order

Overall, the executive order was hailed by tech companies as a necessary step forward in the development and advancement of AI. “Brad Smith, the vice-chair, and president of Microsoft, [stated] it [was] ‘another critical step forward in the governance of AI technology.’ Google’s president of global affairs, Kent Walker, said the company looks ‘forward to engaging constructively with government agencies to maximize AI’s potential—including by making government services better, faster, and more secure.'”

Last week, “delegates from 27 governments worldwide, as well as the heads of top artificial intelligence companies, gathered for the world’s first AI Safety Summit [in] London…Among the attendees: representatives of the US and Chinese governments, Elon Musk, and OpenAI CEO Sam Altman.” Government and technology leaders appear to embrace AI and are ready to implement necessary changes.

“UK Prime Minister Rishi Sunak said that AI will have the potential to become the ‘most disruptive force in history.'” While this is probably true, it is also essential to keep in mind the goal of technological advancement. As the Brookings Institute put it: “Technology should not erase people, nor should it harm people. In fact, it was always developed to help us solve social problems.”

How Does the Executive Order Impact the Legal Field Specifically?

All fields of the legal sector will be impacted by AI, from healthcare, education, and national security to labor, commerce, intellectual property, and ethics. The Executive Order is a framework that “creates new opportunities and challenges for legal professionals as they will need to advise and represent clients on various legal issues related to AI,” including human rights, liability, compliance, and contracts.

Lawyers must adapt to this new AI environment to stay competitive in the legal field. Learning how to incorporate AI into their daily practice, becoming literate in AI systems, and knowing the limits of AI – all in the context of legal professional standards and client obligations.

Ready to Get Started?

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Sources:

https://www.whitehouse.gov/briefing-room/presidential-actions/2023/10/30/executive-order-on-the-safe-secure-and-trustworthy-development-and-use-of-artificial-intelligence/

https://www.whitehouse.gov/briefing-room/statements-releases/2023/10/30/fact-sheet-president-biden-issues-executive-order-on-safe-secure-and-trustworthy-artificial-intelligence/

https://ogletree.com/insights-resources/blog-posts/president-biden-signs-wide-ranging-executive-order-on-ai-with-serious-implications-for-employers/

https://www.ey.com/en_us/public-policy/key-takeaways-from-the-biden-administration-executive-order-on-ai

https://www.iansresearch.com/resources/all-blogs/post/security-blog/2023/10/30/the-new-biden-ai-executive-order-3-top-takeaways-for-security-teams

https://www.govtech.com/blogs/lohrmann-on-cybersecurity/artificial-intelligence-executive-order-industry-reactions

https://www.pbs.org/newshour/politics/analysis-how-bidens-new-executive-order-tackles-ai-risks-and-where-it-falls-short

https://legal.thomsonreuters.com/blog/how-president-bidens-executive-order-on-ai-impacts-the-legalsector/#:~:text=To%20protect%20Americans’%20privacy%20from,collection%20practices%2C%20and%20establishing%20guidelines

https://www.nytimes.com/2023/10/30/us/politics/biden-ai-regulation.html

WeWork Inc., the company that tried to revolutionize the way people work, filed for bankruptcy on Monday in a New Jersey courthouse. Started by ex-CEO Adam Neumann and his business partner Miguel McKelvey, WeWork was once valued at $47 billion during its peak success.

In its Chapter 11 bankruptcy petition, WeWork listed its assets at $15 billion and stated the company has more than $18 billion in debt. The company also has an average of $100 million in unpaid rent.

Current WeWork CEO David Tolley stated, “WeWork is requesting the ability to reject leases of certain locations, which are largely non-operational, and all affected members have received advanced notice.”

The bankruptcy filing signifies a major fall for a startup company that once promised to “raise the world’s consciousness” and upend the way people work by creating nontraditional office spaces. Let’s get into how a global office-sharing conglomerate came crashing down.

What is WeWork?

Despite promoting itself as a tech company, WeWork is a real estate company offering freelance workers and startups swanky office space to pursue entrepreneurial endeavors. WeWork leases buildings and divides them into office spaces to sublet to members who want to avoid paying for permanent office space. The company is headquartered in New York City and has offices all around the world. According to CNN, WeWork locations outside the US and Canada are not part of the bankruptcy proceedings.

WeWork caters to young professionals with flexible workspace needs who want to save money on something other than permanent office space. According to its website, WeWork’s vision is to create environments where people and companies can cooperate and do their best work.

A former architect for the company described to the New Yorker what it was like when she initially walked into WeWork’s Chelsea location. She said the “vibe” was magnetic. “There were endless seating options: booths, extra-large couches, café-style tables. A barista whipped up lattes with vegan milk, and the central pantry offered wine, beer, and kombucha on tap. It’s bright and bustling, she went on. People are chatting in small groups or having coffee and working on a laptop. You’re convinced that they are busy and doing things well. It’s interesting because that’s what they were selling: this energy, this magnetic, productive buzz.”

And people bought into this energy. WeWork became one of the fastest-growing companies in the world. Founded in 2011, by 2019, WeWork was valued at $47 billion. Unfortunately, as fast as the company rose to fame –it came crashing down just as quickly. This is partly due to the company’s founder and infamous CEO –Adam Neumann.

Who is Adam Neumann?

Popularized in the Apple TV show WeCrashed, Adam Neumann is a cofounder of WeWork and the ex-CEO of the company. Together with his wife Rebekah Neumann, Adam and business partner Miguel, launched the startup in 2011. It grew at a rapid pace, and WeWork went on to become the most valuable startup in the United States. WeWork became known as a disrupter in the office market by taking “long leases on large properties and renting the space to multiple smaller businesses on more flexible, shorter arrangements.” Media outlets called Adam Neumann a unicorn. His magnetic personality allowed him to successfully court major investors, including SoftBank, “venture capital firm Benchmark, and major Wall Street Banks, including JP Morgan Chase.

Adam Neumann’s flamboyant (sometimes erratic) personality defined WeWork’s brand. He wanted to dismantle the traditional way office space was used and create an environment that would bring people together so they could do their best work. He is a charismatic, Israel-born entrepreneur, who wanted to change the world through his vision of shared workspace. His wife Rebekah inspired Neumann from the start, and she believed that through their company, they would “elevate the world’s consciousness.”

Forbes featured Neumann on the cover of its magazine in 2019 when WeWork was valued at over $47 billion, and he became a total celebrity compared to the likes of Elon Musk and Steve Jobs. Featured on the cover of Vanity Fair, Neumann once said WeWork would eventually be valued at ten trillion dollars.

Unfortunately, the faster WeWork grew and increased revenue, the faster it racked up huge losses –losing millions of dollars each year. WeWork’s Board and investors grew weary of Neumann’s lavish lifestyle and believed he was running the company more like a fraternity than a business. Revelations about “Neumann’s pursuit of swift growth at the expense of profits” and information about his eccentric behavior came to light. The media pitted him as a national embarrassment –right when WeWork considered going public. Fearful that Neumann could not lead WeWork into its next business phase –the Board ousted him as CEO.

The 2019 IPO launch never happened because “the proposed share sale imploded spectacularly after investors questioned the company’s hefty losses and balked at Neumann’s management style and corporate governance lapses.”

Adam Neumann was replaced as CEO by Sandeep Mathrani, who tried to correct the company’s bad habits, but it never fully recovered after Neumann left.

Why did WeWork File for Bankruptcy?

A few reasons. Neumann racked up a ton of debt while he was CEO, and it took years to try and reposition the company. Then, in 2020, the coronavirus pandemic took the world by storm, and office spaces closed as people went to work from home. The company tried to “amend its leases and restructure its debts,” but it continued to decline as rapidly as it grew.

WeWork took on billions in debt to “amass its large portfolio of leased office space.” However, primarily because of the pandemic, the demand for shared office space “never reached the level necessary to match the large acquisition WeWork made. Not having enough tenants meant WeWork could not offset its losses or pay its sizable rent payments on the offices it had already leased.”

“By 2021, estimates of WeWork’s value had fallen as low as $10 billion. The company finally went public through a merger with a blank-check acquisition company in October of that year.” However, because WeWork had too many signed leases and too few tenants to fill the office space, the debt they accumulated “pushed the company into bankruptcy.”

The rise and fall of WeWork is a cautionary tale “regarding a period of low-interest rates in the 2010s that spurred a flood of investment into startups.” But just as quickly as WeWork rose to fame, the company’s irresponsible spending and rapid growth rate led to its crash.

WeWork’s Future and Adam Neumann’s Flow

When news broke that WeWork filed for bankruptcy, Adam Neumann said it was “challenging” for him to watch from the sidelines and that he was “disappointed” by the bankruptcy. He accused WeWork of “failing to take advantage” of its potential.

“‘As the cofounder of WeWork who spent a decade building the business with an amazing team of mission-driven people, the company’s anticipated bankruptcy filing is disappointing,’ said Neumann in a statement on Monday.”

Where is Adam Neumann now? He is still an entrepreneur and, in fact, “he could soon be taking on his former company WeWork.” Four years after being ousted as CEO, he started a new venture called Flow –described as a “residential consumer-facing real estate company.” According to Forbes, Flow has already raised $350 million, and Neumann said his new company will either “compete or partner” with WeWork. It will be interesting to see where Neumann’s next venture takes him, and whether he can reclaim his “unicorn” status.

Want to know more?

Interested in startups and finance law? Want to know more about bankruptcy petitions? Head on over to Trellis.law. Trellis is a California-based, AI-powered state court research platform. We make state trial court data accessible to everyone so that litigators can adequately prepare for their day in court. If you want to save time in your legal practice –check out Trellis!

Sources:

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