Harvey E. Bines, Attorney at Sullivan & Worcester
We sat down with Harvey E. Bines, an attorney at Sullivan & Worcester and co-author of Wolters Kluwer’s legal treatise Investment Management Law and Regulation, to discuss the origins and evolution of the comprehensive legal treatise, first published in 1978. Drawing on more than five decades of experience in legal practice, teaching, and scholarship, Bines shares insights into what distinguishes the treatise from other legal resources, its value to legal professionals and scholars, and the key developments shaping the future of investment management law.
Harvey practices primarily in the areas of international and domestic corporate finance and domestic corporate governance, investment management law, securities law, including the Investment Company Act and Investment Advisers Act, and corporation, limited liability company and partnership law. Harvey counsels domestic and foreign clients, and advises clients respecting domestic and offshore investments and transactions. He also counsels on CFIUS compliance in international transactions following enactment of FIRRMA and compliance requirements under the recently-enacted Corporate Transparency Act.
Harvey was formerly an associate professor of law at The University of Virginia School of Law (investment law, torts) and an adjunct professor at Boston College Law School (corporate finance). Harvey has advised and lectured in Israel, Ireland and Central and Eastern Europe. He has served as a board member of an NYSE-listed company and of an NASD company. Harvey has lectured in the United States and in China, England, the Czech Republic, Austria and Hungary on private-equity investment, institutional investment and public and private investment companies and other collective investment vehicles. As a member of the Advisory Committee, he counseled on the revised prudent investor rule, extensively analyzed and discussed in his treatises.
Can you tell us about your legal career, your practice background, and what you are currently working on?
Following duty in Navy Fighter Squadron Eight-Four, based at NAS Oceana, Virginia Beach, and attached to U.S.S. Independence, CVA-62, I attended UVa Law, J.D. Class of 1970. I was fortunate after graduation to clerk for Hon. John D. Butzner, Jr., the Virginia member of the Fourth Circuit Court of Appeals and one of the leading lights of American jurisprudence in the second half of the 20th Century.
As a Boston native, Boston Latin ’59, it had been my intention to return to Boston following my clerkship. I took the Massachusetts Bar examination in 1970 and was formally admitted in 1971. As it happened, however, Monrad Paulsen, Dean of UVa Law asked me to join the law faculty. My wife was a doctoral candidate in diplomatic history at UVa, and Charlottesville is a special place. So, I sat for the Virginia Bar, and we returned to Charlottesville for five years.
During my time on the Virginia faculty, I taught torts, evidence and corporate finance. I also was a faculty adviser to the UVa Law Post-Conviction Review Project and an appellate counsel for the Virginia ACLU.
During my time as a member of the UVa Law faculty, I wrote three law review articles and began work on my treatise, Investment Management Law and Regulation. One article, Remedying Ineffective Representation in Criminal Cases: Departures from Habeas Corpus, 59 Va. L. Rev. 927 (1973), followed a habeas appeal on a theory of ineffective assistance of counsel. The petitioner was one of those arrested for robbing a gas station and kidnapping the attendant. The appellant’s brother had confessed, implicating the appellant, but recanted. Appointed counsel nonetheless represented both brothers. The record reflected other serious pre-trial and trial errors. Nonetheless, a panel of the Fourth Circuit declined to abandon the then-prevalent mockery-of-justice standard relied on in effectiveness cases. My article argued that the traditional rule developed because a remedy overturning a conviction is a cost imposed on society, not on the underperforming lawyer, and that, at least in cases in which guilt or innocence is impacted by ineffective representation, habeas relief is appropriate. The article was cited by the Supreme Court in United States v. Cronic, 466 U.S. 648, 659n. 26, and by Federal and State appellate courts in support of a standard rationally related, in cases of ineffective representation, to ordinary professional competence.
A second article, which was foundational to major elements of my subsequent treatise is, Modern Portfolio Theory and Investment Management Law: Refinement of Legal Doctrine, 781 Colum. L. Rev. 781 (1976). That article was much cited when published, through the years following and it is occasionally cited still.
As I was leaving Charlottesville for Boston, I submitted the manuscript of Law of Investment Management to Warren, Gorham & Lamont, a leading law publisher (WG&L’s law assets were subsequently acquired by Little Brown, and shortly thereafter, that publisher’s law assets were acquired by Wolters Kluwer). Following a customary editorial process, the first edition of the treatise was published in 1978 and annually supplemented. There was no other comparable asset.
During the 1980s, I taught corporate finance law at Boston College Law School. Also, during that period, I was admitted to the American Law Institute. My most significant contribution as a member was working closely with Professor Ed Halbech, Reporter for Section 90 of the Restatement (Third) of Trusts, the prudent investor rule.
When I was considering a second edition of the treatise, Professor Victor Brudney, a leading figure in corporate finance law at Harvard, introduced me to Steve Thel, Wormser Professor of Law at Fordham. That introduction led to a close friendship and collaboration on the second and third editions of the treatise, renamed slightly to “Investment Law and Regulation.”
My practice during my tenure at Sullivan & Worcester has been varied. As counsel to the New Haven Railroad estate, the firm was a major player in the Penn Central reorganization, an engagement that involved corporate finance, litigation and complex negotiation. I also served on the Sullivan & Worcester team representing the Kansas City Southern, a protesting party in the Union Pacific/Missouri Pacific merger proceedings before the ICC. I have represented among other clients, including a national courier corporation generally and in public finance and M&A, major investment management firms in business and litigation, a major defense contractor in M&A transactions, an international broker-dealer, principals in private equity transactions, and from time to time, litigation in corporate finance and transaction disputes.
In addition to ordinary-course legal services, I am working on the annual supplements to and a fourth edition of Bines and Thel, and a new book. In addition, I will be circulating a paper directed at revisiting ERISA and, with nearly half the American workforce entitled in retirement only to Social Security, expanding work-related retirement compensation.
Your treatise, Investment Management Law and Regulation, published by Wolters Kluwer, traces its origins to 1978. What inspired you to write it, and how has it evolved over the decades?
When I was teaching law at Virginia, I had proposed a treatise focused on the Investment Company Act and the Investment Advisers Act. I had become interested in such a project during summer clerking at Sullivan & Worcester, which had a substantial practice in that domain. The editor-in-chief at Warren, Gorham & Lamont expressed interest, but only if the project covered investment management in all domains, not just investment companies and advisers.
Research revealed that, other than registered investment companies, the relevant law was not well formed. That alone presented an opportunity. That was not all, however. Modern Portfolio Theory was just entering currency in the investment community, and the quantitative education I had received at MIT was invaluable to understanding both what was emerging and its limitations as a postulate to fiduciary law. Those circumstances led to publication in 1976 of my widely read and cited Columbia Law Review article on the impact of MPT.
Finally, the timing was right. In 1970, following years of study at the SEC and elsewhere, Congress had enacted major amendments to the Investment Company Act and the Investment Advisers Act. In 1974, Congress enacted ERISA. The following year Congress enacted the Securities Acts Amendments, which ended more than two centuries of fixed commission rates, among other things. A major effect was to end bundled sales and research services by the investment banking and broker-dealer communities. With commissions and market-making serving only the cost of securities transactions, investment services of all shapes came to reflect the competitive value of the services provided, a beneficial result with major effect on delivery of investment management engagements.
What distinguishes Investment Management Law and Regulation from other resources on investment management law and securities regulation?
I am unsure of how to answer this question. To my knowledge, Bines and Thel is the only resource that covers investment management law comprehensively. Other resources focus more narrowly on a segment of investment services. For example, Professor Tamar Frankel brilliantly organized her treatise to cover investment companies and advisers under the two’40 Acts. The scope of Bines and Thel is far broader.
Who would benefit most from this treatise, particularly law schools, law libraries, law firms, and legal professionals, and how can they use it in their research, teaching, and practice?
All, including students. Bines and Thel is not a cookbook. It puts history in perspective to inform and it addresses policy issues critically as law and regulation mature and as investment products and practices adapt to then-current needs. The authors’ approach has been to help users of the treatise recognize continuity of core principles around which investment and compliance practices develop and evolve, while providing coverage of then-controlling and emerging law and regulation. The treatise is especially reliable as the most comprehensive publication addressing “prudence” as investment insights and practices develop and impact investment services.
How has your experience as a practicing attorney influenced your approach to writing about investment management law?
The advantage of practice as a lawyer over theory as an academic is that clients want advice that enables them to make informed choices in the face of uncertainty and to obtain reasonable protection against contingencies as transactions and marketplaces evolve. To put it slightly differently, businesswomen and businessmen, government officials at all levels, nonprofit executives and academics responsible for the continuity and growth of educational institutions all have objectives dependent on choice in the face of uncertainty, including preparing for unpredictable but inevitable disputes, and when they occur, resolution and response. A good lawyer (and a worthwhile treatise) certainly brings the perspective of both current law and the results of dispute resolution historically and currently that informs evaluation of risk and management of compliance. But, at least in the case of Bines and Thel, we have tried to anticipate, as well. As it turns out, comprehensive writing enables both readers (and authors) to provide advice and advance greater perspective in the face of uncertainty.
Looking ahead, what developments in investment management law should attorneys and other legal professionals be paying particular attention to?
Broadly speaking, the principles core to investment management law do not change, but the contexts in which those principles are applied do — sometimes dramatically, as was the case when MPT became a dominant perspective. The integration of MPT and law, however, is a way station, not a destination; the environment in which principles apply does and will continue to change, sometimes dramatically. For example, for reasons explained in the paper I am currently writing, American retirement policy is likely to expand worker coverage dramatically. The policy issues will attend to worker coverage, adequacy of deliveries in retirement and investment options to fund retirement distributions. The investment universe necessary to service that expansion will adapt unpredictably, and American law will respond. The quality of solutions will require an understanding of how investment management law adapted to historical contexts and operates currently.
Stay tuned.
