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Raising Eyebrows (among Other Things) At Floyd Abrams


The famed first-amendment lawyer tells the Times that “I haven’t had any personal criticism, no eyebrows raised, no how-could-you’s" owing to his work defending the rating agency Standard & Poor's against investor lawsuits. Okay, well, consider this the personal criticism then: Abrams' argument for why S&P isn't to blame for all the havoc its delusional (or worse) ratings appear to have wreaked is completely idiotic. How's that?

As the Times story explains:

Mr. Abrams will contend that S.& P.’s ratings deserve exactly the sort of free-speech protections afforded to journalists, on the theory that a bond rating is like an editorial — an opinion based on an educated guess about the future. And for the same reason you can’t sue editorial writers, Mr. Abrams will argue that you can’t sue a bond rater because the economy went into a free fall that few saw coming.

“It shouldn’t change the legal dynamics that rating agencies are more important, or play a greater role, or are looked to by this or that element of the marketplace,” he says. “The major similarity here is that both the newspaper and S.& P. are offering opinions on matters that people can and do disagree about.”

Well, insofar as opinions are like a**holes, then Abrams may have a point. But the legal analysis strikes me as a little shoddy. For one thing, most pension funds don't have rules requiring the Milwaukee Journal-Sentinel to bless certain securities before they can invest in them. More importantly, as the Times reports: 

“I don’t think it’s a good legal argument, though there might be some courts that buy it,” says John C. Coffee, a law professor at Columbia. “I don’t think that a rating is the same as an editorial, because The New York Times’s editorial page isn’t paid for by a sponsor. The direct, commercial relationship of the issuer of the bond and the rating agency puts it into the field of commercial speech.”

Generally, commercial speech isn’t accorded the same high level of protections given to journalists. There are potential legal repercussions, for instance, when a doctor gives a medical opinion that turns out to be wrong, says Rodney A. Smolla, dean of the Washington and Lee University School of Law.

How bout when a lawyer gives a legal opinion that turns out to be ludicrous?

--Noam Scheiber