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Marc Jay Lane (b. August 30, 1946), pioneer in the socially responsible investing movement through his development of the Advocacy Investing methodology, as well as early adopter of the Multidisciplinary Practice approach to law practice, is President and Founder of The Law Offices of Marc J. Lane, P.C., and its financial services affiliates.
In addition to practicing law and investment advising, Marc is an adjunct professor of law at Northwestern University School of Law; author of 32 books, including Profitable Socially Responsible Investing?, which laid out his research and argument for his Advocacy Investing approach to socially responsible investing (SRI); and signatory to the United Nations Principles for Responsible Investing and the United Nations Global Compact.
EDUCATION
Marc began his undergraduate studies at the University of Illinois at Chicago in 1963. He graduated with honors in 1967, with a Bachelor of Arts in Political Science. He then worked his way through law school (Northwestern University School of Law) by managing an insurance agency for doctors. After obtaining his Juris Doctor in 1971, he continued to pursue education in various areas during the course of his professional career, including post-doctoral studies in taxation at the John Marshall Law School from 1974-1975, and achieving the designations of Mastered Registered Financial Planner from the International Association of registered Financial Planners in 1987, and Registered Financial Consultant from the International Association of Professional Financial Consultants in 1994.
CAREER
Pioneer in a Multidisciplinary Practice Approach Marc started his law career in 1971 when he formed The Law Offices of Marc J. Lane, P.C. Intending to work in the field of litigation, he was diverted by a surplus of medical professionals seeking advice about new tax laws providing benefits for incorporating professional service companies. Advising the medical community on various legal issues pertinent to the medical profession led Marc to abandon litigation altogether and author several books regarding medical practice and the law (Brunts 2002).
As the law practice developed, and because they were already providing regular tax and tax law services to both individual and business clientele, Marc strategically created several financial services affiliates in order to facilitate various transactions for law clients in need of such services. In 1984, he formed Longmeadow Insurance Services, Inc., a risk management company. The following year, after realizing there was a market for tax-advantaged investment opportunities, he formed Marc J. Lane & Company, an NASD-registered broker-dealer founded to facilitate the offering of financial services for general securities and investment banking. In 2003, he created Marc J. Lane Investment Management, Inc., a registered investment advisor. These affiliates created a unique, Multidisciplinary Practice (MDP) firm with its foundation in law and legal tax services, in addition to accommodating a holistic approach to planning through it financial services affiliates.
This approach has been hotly debated by both state and national bar associations because some fear that Multidisciplinary Practice (MDP) “might undermine or dilute the integrity of the delivery of legal services by the legal profession.” As Thomas Rice, former President of the New York State Bar Association, stated, “The core issue is about a client’s right to independent legal counsel and a lawyer’s obligation to provide legal services unencumbered by the conflicting interests of others. The assurance of client confidentiality and sound, independent counsel are fundamental and paramount. Proposals aimed at furthering the business expansion plans of entities concerned with more than the bottom line than a client’s right to zealous and effective legal advocacy are unacceptable” (Silas 2006).
However, because some attorneys have thought they risked losing business to non-legal professionals, such as those who offer tax and financial advice, other attorneys, in addition to Marc, have strategically ventured into MDP in order to remain competitive. The benefit of an MDP practice, in the attorneys’ eyes, is to both maintain and grow their existing base of clients, and because they believe that clients stand to benefit from the MDP approach (Silas 2006).
Advocacy Investing In 2005, after conducting an extensive period of research, Marc contributed a major new work to the financial and investment communities when Institutional Investor published his 32nd book, entitled Profitable Socially Responsible Investing? In the book he revealed the findings of his studies, and outlined what he called his Advocacy Investing approach to values-based and mission-driven investing, particularly as it relates to socially responsible investing (SRI) and corporate social responsibility (CSR). He claimed that the research indicated that companies whose performance was exemplary in the areas of social justice (human rights, diversity, and employee relations) and the environment not only provided competitive market returns, but often outperformed the benchmark used, which, in his research study, was the Russell 3000 stock market index (Lane 2005).
Although the Advocacy Investing approach was met with enthusiasm and praise by both individual and institutional investors and money managers—landing Marc in multiple media outlets such as CNBC, Forbes, Fortune, The Wall Street Journal, and the Financial Times—it also sparked controversy and skepticism among others, including traditional SRI mutual fund money managers whose methods of negative portfolio screening were attacked in Marc’s book. According to Marc and other critics of negative screening, a “performance penalty” is exacted upon a portfolio whenever a negative screen is applied (Lewis 2006). Academic research done by others, such as Christopher Geczy, an assistant professor of finance at the University of Pennsylvania's Wharton Business School, suggests that investment portfolio screens can sometimes result in “inadequate diversity to buoy lackluster [performance] in down markets,” resulting in “lower [average] annual returns” (MacDonald 2006).
Around the same period of time, research came out from the sell-side of Wall Street, confirming and complimenting the findings of Marc's published research. Analysts from major global financial firms, such as Shirley Hudson and Julie Knott of UBS Global Equity Research, published reports stressing the importance of CSR and its impact on shareholder value. Hudson and Knott’s theme piece, “Why Try to Quantify the Unquantifiable?” was both an important and controversial research article by the firm in that it was its first formalized report objectively quantifying the business risk associated with CSR issues. Although it wasn’t its first report related to SRI, UBS reported that with the increased customer demand for SRI-related reporting and research, such an effort was warranted. According to Hudson and Knott, “We think the concept that SRI represents is of genuine importance to all investors, as well as the SRI specialists. We believe it is becoming increasingly clear that society is… penalizing companies that do things that, though arguably legal at the time, turn out to have antisocial effects; and equally clear that firms are, increasingly, competing to get Corporate Social Responsibility (CSR) issues right” (Hudson and Knott, 2005).
In addition, the United Nations Environment Programme Finance Initiative (UNEP FI) Asset Management Working Group published two separate reports (“The Materiality of Social, Environmental, and Corporate Governance Issues to Equity Pricing” in 2004 and “Show Me the Money: Linking Environmental, Social, and Governance Issues to Company Value” in 2006) compiled from global brokerage firms’ analysts' research. These reports aimed to prove the validity of Environment, Social, and Governance (ESG) factors as they relate to business enterprise valuation and shareholder value.
In February 2007, Marc launched a national marketing initiative to advance the mission of the SRI movement through collaborative enterprise and joint educational efforts focused on taking the Advocacy Investing approach and SRI mainstream. As part of this initiative, his financial services firm, Marc J. Lane Investment Management, Inc., became the first registered investment advisor to host a public community bulletin board online -- called The SRI Open Forum (http://www.sriopenforum.com) -- specifically devoted to socially responsible investing. He has since gone on to begin writing a 33rd book entitled Advocacy Investing, a non-technical book explaining his Advocacy Investing approach to socially responsible investing.
REFERENCES Brunts, Julia. “From seed of law, he grew a business”, Chicago Daily Law Bulletin, December 9, 2002.
Hudson, Julie and Shirley Knott. “Why Try to Quantify the Unquantifiable?”, UBS Investment Research QSeries®: Corporate Social Responsibilities, April 11, 2005.
Lane, Marc. Profitable Socially Responsible Investing? 2005.
Lewis, Geoff. “Advocacy Investing—Catnip for Wealthy Clients?”, Registered Rep, June, 2006.
MacDonald, G. Jeffrey. “Investors screen companies through a positive approach,” The Christian Science Monitor, January 23, 2006.
Silas, Faye. “Bars Begin to Analyze MDP”, Bar Leader, 2006.
