Achieving Law Reform Sometimes Requires a Strong Defense
Brooklyn Journal of Corporate, Financial, and Commercial Law, Forthcoming
15 Pages Posted: 12 Oct 2022 Last revised: 26 Oct 2022
Date Written: October 1, 2022
This article was written for a Festschrift honoring Professor Neil Cohen of the Brooklyn Law School upon the occasion of his retirement and is forthcoming in the Brooklyn Journal of Corporate, Financial, and Commercial Law.
In 2019, a joint drafting committee authorized by the Uniform Law Commission and the American Law Institute began to work on a sweeping set of amendments to the official text of the Uniform Commercial Code (UCC) that address issues arising from emerging technologies. The amendments were approved by the sponsoring organizations at their 2022 annual meetings, and efforts are already underway to gain uniform nationwide enactment by state legislatures. The most significant changes to the UCC consist of a new Article 12 dealing with digital assets and amendments to Article 9 that facilitate the leveraging of these assets. Also, in 2019, Wyoming adopted legislation to accomplish much of the same thing. Although well-intended, the manner in which the legislation was drafted created serious problems for the functioning of that state’s version of Article 9 and for lawyers planning financing transactions involving digital assets. Between 2019 and 2022, bills based on the Wyoming model were introduced in over 20 states. In response, the Uniform Law Commission launched an intense effort by a small team of its members to explain to these states the problems with the legislation and to encourage them to wait for the official amendments to be finalized. I was a member of the joint drafting committee and of the team that opposed Wyoming-like legislation. The Article is based on my first-hand observations and on documents maintained in my files.
After a brief introduction, the Article describes Wyoming’s legislation in Part I and the proliferation of proposed legislation based on the Wyoming model in Part II. Part III analyzes some of the problems with this legislation and how the official amendments to the UCC resolve the problems. Part IV details the results of the team effort, which were almost universally successful, but which led to the enactment in some states of relatively benign alternative legislation. Lastly, the conclusion opines on lessons the Uniform Law Commission has learned from the team effort and how those lessons might impact future projects.
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