Current Issue
VOLUME 7, ISSUE 1
Published December 22, 2025
Articles
Nest Eggs and Lifelines: The Overlooked Strain of Economic Volatility on 401(k) Participants
Samantha J. Prince
Many Americans rely on defined contribution plans like 401(k) plans for retirement savings. These plans do not guarantee a fixed retirement benefit; rather, the benefit is based on accumulated contributions and investment performance. When the stock market drops, so do retirement account balances. When inflation hikes living expenses, money does not go as far. President Donald Trump’s policies, including those associated with tariffs, are causing economic and resource volatility leading to financial hardship. Americans worry as they watch living costs increase and their retirement savings diminish.
It is well known that retirees rely on 401(k) plan balances to fund their living costs. Yet the effects of economic volatility on 401(k) values extend well beyond retirees. Because these accounts serve a dual purpose—funding both retirement and, at times, current spending—workers who are years away from retirement also feel the impact. This Article examines the often-overlooked consequences of economic volatility under Trump 2.0 tariffs and related policies on 401(k) plan participants, including the ways in which inflation and recessionary pressures may drive pre-retirement withdrawals.
Hidden Taxation and the Rise of the Shadow Fiscal State
Doron Narotzki
This Article uncovers a new and troubling development in U.S. fiscal governance: the use of executive-imposed tariffs as covert instruments of sovereign debt management and fiscal redistribution. Building on a provocative theory circulating among policymakers, it explores the possibility that President Trump’s second-term tariff strategy aimed not merely at confronting foreign adversaries, but at reshaping external balances, stabilizing bond markets, and reducing reliance on foreign capital inflows. At the same time, the use of hidden, regressive tariffs helped to subsidize and sustain large-scale tax cuts for the ultra-wealthy, shifting the fiscal burden onto ordinary consumers without legislative transparency or consent.
Whether or not this theory fully captures the administration’s intent, the constitutional and institutional dangers it reveals are profound. By repurposing tariffs to achieve fiscal objectives, the executive branch constructs a system of hidden, regressive taxation that bypasses Congress’s exclusive authority under Article I of the U.S. Constitution. This practice severs the constitutional link between taxation and democratic accountability, replacing transparent lawmaking with opaque executive discretion. Tariffs, once instruments of trade policy, become de facto taxes imposed without public debate, statutory clarity, or procedural safeguards.
Beyond domestic concerns, this Article situates the phenomenon within the broader framework of international law. The unilateral imposition of tariffs for debt management purposes strains U.S. compliance with core World Trade Organization obligations, undermining the credibility of the rules-based trading system at a moment of deepening global economic fragmentation.
By tracing the emergence of a “shadow fiscal state” through the executive’s tariff powers, this Article offers a new lens for understanding the erosion of constitutional governance and international economic norms. It concludes by proposing structural reforms, including a dual-track system for tariff actions modeled on administrative law procedures, to restore congressional control over fiscal policy and reinvigorate democratic transparency in taxation.
Fiduciary Fault Lines: Navigating Ethical Conflicts in Arizona’s Alternative Business Structures
Jon Iversen
A trustee is held to something stricter than the morals of the marketplace. Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior.”[1] The renowned Judge Benjamin N. Cardozo penned this quote, and in it he articulated the high standard to which the law holds trustees (i.e. fiduciaries) in representing their principals. The language he used to describe such a relationship borders on the sacred and the inviolable—language people expressing religious fervor or matrimonial commitment use. But his writing was not mere rhetorical flourish. Rather, in his soaring language he expressed a foundational principle of ethics that has gone on to influence the development of the fiduciary duty in corporate law.
While traditionally thought of as a principle of business ethics, the fiduciary duty also arises in the context of a lawyer’s representation of her client (i.e. legal ethics).[2] This is certainly true in Arizona wherein this duty is recognized, albeit not explicitly, in the legal ethics rules that govern attorneys’ behavior. In particular, the notion of a fiduciary duty inheres within the confidentiality and conflict of interest ethics rules.[3] These rules include Ethics Rules (“ERs”) 1.1 (Competence), 1.3 (Diligence), 1.6 (Confidentiality of Information), 1.7 (Conflict of Interest: Current Client), 1.8 (Conflict of Interest: Current Client: Specific Rules), and 1.9 (Duties to Former Clients).[4]
Within the last several years, this fiduciary relationship and these ethics rules have taken on greater salience in Arizona’s legal community due to the Arizona Supreme Court’s (“the Court’s”) abolition of Rule 5.4.[5] On August 27, 2020, the Court abrogated Rule 5.4 and promulgated Rule 31.1, thereby permitting Alternative Business Structures (“ABSs”).[6] Following this change, nonlawyers could own law firms.[7] But this change was not met without opposition.[8] After all, the status quo at the time in nearly every state was that only lawyers could own law firms. Many detractors, both in Arizona and in other states, expressed concerns that by allowing nonlawyers to own law firms, ethical tensions would be created between a lawyer’s fiduciary duty to his client and the nonlawyer owner’s commercial interest in turning a profit.[9]
After three years, the Court itself signaled concerns over the sufficiency of its regulatory scheme surrounding ABSs when it established the Task Force on Alternative Business Structures (“ABS Task Force”) and empowered it to investigate concerns related to ABSs.[10] The Court gave the ABS Task Force three mandates: to determine (1) whether the Court should require ABSs to make additional disclosures; (2) whether the Court should allow ABSs to form solely to practice mass tort litigation; and (3) whether the Court should mandate that ABSs provide substantial services to people in Arizona.[11] Several months later, the Court asked the ABS Task Force to review “third-party financing of civil litigation and its ramifications for Alternative Business Structures in Arizona.”[12] Through its creation of the ABS Task Force, then, the Court expressed lingering ethical concerns surrounding ABSs.
Notwithstanding these concerns, it remains that Arizona has blazed a trail down which other states now seek to travel. Washington state has recently created a pilot program that allows ABSs.[13] Indiana, too, has begun its journey down this path.[14]Furthermore, two other states—California[15] and Florida[16]—have considered allowing ABSs, although neither has moved forward with such a proposal. And finally, Utah and Washington, D.C. have already created programs through which some nonlawyers can own law firms.[17] In total, of the seven jurisdictions in the United States that have considered permitting ABSs, five of them have done so.
Given the increasing number of jurisdictions that are either investigating or permitting ABSs, and given such a trend has the potential to completely transform the delivery of legal services across the country, a thoughtful examination of the state that pioneered that movement is needed. Arizona now has over four years of experience overseeing ABSs, and its experience managing them can serve as a model for other states. To be sure, there are some ethical questions regarding ABSs in Arizona that remain unanswered, but these questions can be answered by reference to Australia’s and the UK’s experience with ABS-like programs.
Part I will discuss the Court’s introduction of ABSs in Arizona. This will include: (1) an examination of the history leading up to the Court’s ethics reforms that permitted ABSs; (2) the ethical criticisms ABS opponents initially voiced; (3) the actions the Court took to address these criticisms at the outset; (4) the current efforts the Court is employing to mitigate lingering and newly-emerging ethical concerns related to ABSs; and (5) the remaining ethical questions regarding ABSs that are still unanswered. These open questions will serve as a catalyst for Part II.
Part II will undertake a case study of Australia and the United Kingdom—two foreign jurisdictions that have permitted nonlawyer ownership of law firms for many years—in an effort to answer these questions.[18] For both countries, Part II will examine: (1) the history surrounding their adoption of ABS-like programs; (2) the ethical concerns each country attempted to address at the outset of their programs; (3) the changes each country made to address residual ethical concerns related to their ABS-like programs; and (4) the regulatory approach each country took in response to the rise of third-party litigation funding.
Finally, Part III will articulate which reforms Australia and the UK took that Arizona regulators should investigate to answer the open questions Part I details.
Corporate Waste Crossing the Rubicon: The Case for Executive Compensation Award Enhanced Scrutiny Applied Review
Jae Yoon
Is Elon Musk Leading Revolutionary Changes for Corporations, Courts and CEOS?
Koral Zaarur
Elon Musk, currently the world’s wealthiest individual with a net worth nearing $435.3 billion,[1] has amassed his fortune through various high-impact ventures, including Tesla, SpaceX, OpenAI, Neuralink, and X (formerly Twitter).[2] Widely recognized as a visionary, “serial entrepreneur,”[3] and innovator, Musk leads advancements in space exploration and sustainable technology. However, his unorthodox and often controversial behavior has garnered substantial public attention. Musk has shown little regard for the conventional expectations tied to his status, maintaining a high-profile persona through provocative remarks and actions. From rebutting an employee’s concern with work-life balance by saying they would “see their families a lot when [Tesla] go[es] bankrupt,”[4] to harassing public figures online, Elon seems to do what Elon wants, and this trend has not let up.[5]
Musk is no stranger to litigation and public scrutiny, often appearing to welcome it rather than avoid it. Unlike most Chief Executive Officers (CEOs) who are cautious about their public image, Musk frequently speaks without concern for the consequences. His history reveals a pattern of disregarding legal boundaries, treating them as mere suggestions, which has often led to collateral impacts on shareholders across his various companies. These behaviors do not go unanswered, and in multiple instances they have spelled trouble for public perception, corporate governance, business law, and regulatory standards, and they have also influenced future CEOs to adopt similar attitudes.
One dispute that exemplifies Musk’s behavior is the January 2024 case Tornetta v. Musk (“Tornetta I”), where shareholders filed suit against the CEO for his absurd pay package. Musk’s response to the Delaware Court of Chancery’s decision in Tornetta I—suggesting Tesla’s reincorporation in Texas as a reaction to the ruling against his compensation package—raises serious concerns. Such actions could set a troubling precedent, potentially undermining Delaware’s long-standing role as the premier jurisdiction for entity incorporation. By disregarding the ruling and pursuing reincorporation, Musk may encourage directors and officers to circumvent judicial decisions and ignore established legal precedent.
Elon Musk’s recent “temper tantrum” reaction to Tornetta I led him to urge the Board of Directors to reincorporate Tesla in Texas in response to the Delaware Court of Chancery’s unfavorable ruling under which his compensation package was rescinded. This action has the potential to set a dangerous precedent for corporate governance, executive accountability, regulatory oversight, and raises serious concerns regarding the stability of Delaware’s position as the preeminent jurisdiction for incorporation.
This analysis begins by examining Elon Musk’s unconventional character, marked by a consistent disregard for traditional corporate norms and legal boundaries. Section 2 provides a substantive discussion of the Delaware Court of Chancery’s decision in Tornetta I, detailing the rationale behind the ruling and the key legal questions raised by the unpalatable pay package. Section 3 explores the aftermath of Tornetta I, focusing on Musk’s public response and the subsequent push to revote on the compensation package and reincorporate Tesla in Texas. Section 3 also examines the litigious aftermath of Tornetta I, specifically the second lawsuit brought by Tornetta against Musk. Section 4 examines why Musk’s reaction reaches beyond Tesla, including the potential for other companies to follow his lead in circumventing Delaware’s corporate governance framework. Section 4 considers how Delaware’s role as the leading state for incorporation could be challenged, with possible impacts on corporate law, shareholder rights, and board accountability. It also highlights the risks to shareholders when boards and executives act in ways that prioritize personal interests over corporate stability and legal compliance. Finally, Section 5 proposes solutions, outlining reforms in corporate law to address challenges posed by Musk’s conduct and similar behaviors from other executives. This section suggests measures to reinforce Delaware’s governance standards, protect shareholder interests, and ensure corporate leaders uphold principles that safeguard both legal integrity and shareholder value.
Commentary
No commentary in Volume 6, Issue 1.