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Securities Intermediaries And The Separation Of Ownership From Control, Jill E. Fisch

Seattle University Law Review

The Modern Corporation & Private Property is a paradigm-shifting analysis of the modern corporation. The book is perhaps best known for the insights of Berle and Means about the separation of ownership from control and the consequences of that separation for the allocation of power within the corporation. The Berle and Means story focuses on the shareholder as the owner of the corporation. Berle and Means saw the mechanism of centralized management—in which the shareholder retains the economic interest but not the control rights associated with ownership—as threatening the conception of shareholder interests in terms of property rights. In particular, …

Berle And The Entrepreneur, Charles R.T. O'Kelley

Seattle University Law Review

In the first and last four chapters (“the Five Chapters”) of The Modern Corporation and Private Property, Adolf Berle, Jr. describes in sweeping terms a fundamental transformation of the American economy. . . . Writing more than ten years before Berle, another seminal scholar, Frank Knight . . . developed a theory of the entrepreneur as part of his larger effort to more carefully explain the theoretical underpinnings of a free-market economy. . . . Given Knight’s prominence and the fact that Knight apparently reached dramatically different conclusions than did Berle concerning the consequences flowing from separation of ownership …

Monitoring To Reduce Agency Costs: Examining The Behavior Of Independent And Non-Independent Boards, Anita Anand, Frank Milne, Lynnette Purda

Seattle University Law Review

Berle and Means’s analysis of the corporation—in particular, their view that those in control are not the owners of the corporation—raises questions about actions that corporations take to counter concerns regarding management’s influence. What mechanisms, if any, do corporations implement to balance the distribution of power in the corporation? To address this question, we analyze boards of directors’ propensity to voluntarily adopt recommended corporate governance practices. Because board independence is one way to enhance shareholders’ ability to monitor management, we probe whether firms with independent boards of directors (which we define as boards with either an independent chair or a …

The New Financial Assets: Separating Ownership From Control, Tamar Frankel

Seattle University Law Review

In The Modern Corporation and Private Property, Adolf A. Berle and Gardiner Means wrote about the separation of ownership from control in corporations. They noted that the interests of the controlling directors and managers can diverge from those of the shareholder owners of the firm. . . . There are those who consider such a decoupling beneficial. Others express the same concern that Berle and Means have expressed. And depending on what one focuses on in viewing the pluses and minuses of these separations, one could reach different conclusions. I reach a number of conclusions. First, the separation of …

Berle’S Vision Beyond Shareholder Interests: Why Investment Bankers Should Have (Some) Personal Liability, Claire Hill, Richard Painter

Seattle University Law Review

This essay, published in a symposium on the work of Adolf Berle, approaches the Berle-Dodd debate from the perspective that corporate managers have responsibilities beyond pursuing the interests of shareholders. Stock based executive compensation, designed to align managers’ interests with those of shareholders, has, in the investment banking industry in particular, failed to avert, and may have caused, managers (in this case, bankers) to take excessive risks that in the present financial crisis inflicted great damage on creditors and on society as a whole. We describe here the broad outlines of a proposal that we will discuss in future publications …

The Birth Of Corporate Governance, Harwell Wells

Seattle University Law Review

Part I of this Article briefly examines the concept of “corporate governance” and argues for dating the concept’s origins to the debates of the 1920s. Part II then moves on to examine early scholarly and popular discussions of the separation of ownership and control. After surveying the historical developments that produced the recognizably modern corporate economy around the turn of the century, it examines early scholarly and popular discussions of the separation of ownership and control, focusing on three major thinkers, Louis D. Brandeis, Walter Lippmann, and Thorstein Veblen. It argues that, while each of these authors examined the separation …

Inevitable, Flexible, Expandable Caperton?, Bert Brandenburg

Seattle University Law Review

When Caperton v. Massey came before the U.S. Supreme Court in June 2009, the Court ruled that the due process right to a fair trial required Justice Benjamin to recuse himself. Many commentators view Caperton as a limited decision because it set stringent criteria for future due process recusal claims, but the revolutionary ferment surrounding judicial elections could make Caperton-style fact patterns more common in the years to come. The fundamental fears that the Court expressed—that impartial justice and public confidence in the courts could be imperiled—will be stoked and aggravated by the financial arms race that now accompanies …

Keynote Address, Justice Sandra Day O'Connor

Seattle University Law Review

The following address contains the remarks of Justice Sandra Day O'Connor, delivered at the Judicial Independence Conference at Seattle University on September 14, 2009.

Table Of Contents, Seattle University Law Review

Seattle University Law Review

No abstract provided.

Tracking Berle’S Footsteps: The Trail Of The Modern Corporation’S Last Chapter, William W. Bratton, Michael L. Wachter

Seattle University Law Review

Readers game enough to work through all three hundred pages of The Modern Corporation and Private Property looking for insights on corporate law today encounter two, apparently contradictory, lines of thought. One line, set out in Books II and III, resonates comfortably with today’s shareholder-centered corporate legal theory. Here the book teaches that even as ownership and control have separated, managers should function as trustees for the shareholders and so should exercise their wide-ranging powers for the shareholders’ benefit. The other line of thought emerges in Books I and IV, where The Modern Corporation encases this shareholder trust model in …

See No Evil? Revisiting Early Visions Of The Social Responsibility Of Business: Adolf A. Berle’S Contribution To Contemporary Conversations, Erika George

Seattle University Law Review

Much corporate legal scholarship considers such fact patterns as beyond the scope of the discipline’s core concerns. Yet, increasingly, questions are asked concerning the scale and scope of modern corporate power. This Article will challenge the conventional understanding of what the core discipline of corporate law should encompass and argues that the failure to focus on precisely these sorts of factual scenarios involving allegations of corporate complicity in human rights violations and environmental degradation is misguided and short-sighted.

Then And Now: Professor Berle And The Unpredictable Shareholder, Jennifer G. Hill

Seattle University Law Review

Shareholders, and the relationship between shareholders and management, lay at the heart of Professor Berle’s scholarship. The goal of this Article is to compare the image of shareholders emerging from The Modern Corporation and Private Property and the Berle/Dodd debate with a range of contemporary visions of the shareholder that underpin some international regulatory responses to recent financial debacles, from Enron to the current global financial crisis. As the Article dis- cusses, these recent developments in the era of financial crises have prompted a reevaluation of the traditional image of the shareholder—and the role of the shareholder in the modern …

The Liberal University And Its Perpetuation Of Evangelical Anti-Intellectualism, Gretchen Ruecker Hoog

Seattle University Law Review

There is a battle in our country. One side’s ammunition consists of words like elitist, immoral, and secular; the other’s: simple-minded, extreme, and illogical. This battle forced Barack Obama’s campaign to downplay his professorship at a prestigious law school. It drives conservative Christians away from public universities, pits academics against Evangelicals, and sets liberal college professors against Southern pastors. This Comment discusses the battle between the anti-intellectual religious right and the anti-evangelical academic left. While this Comment attempts to explain this dichotomy in some detail, it focuses on how the dichotomy affects the goals of the liberal left and impedes …

Clarke V. Tri-Cities Animal Care & Control Shelter: How Did Private Businesses Become Government “Agencies” Under The Washington Public Records Act?, Jeffrey A. Ware

Seattle University Law Review

This Note analyzes the facts and reasoning behind <em>Clarke v. Tri-Cities Animal Care & Control Shelter</em>'s agency holding, explains how the court was wrong to use and then misapply the <em>Telford</em> functional-equivalency test, discusses the consequences of subjecting government contractors to the PRA, and offers solutions to remedy the mistakes in <em>Clarke</em>. To begin, Part II reviews the facts of <em>Clarke</em> and the requirements of Washington’s Public Records Act. Part III then examines the evolution of Washington’s <em>Telford</em> functional-equivalency test as applied up to, and through, <em>Clarke</em>. Part IV explains the several reasons why <em>Clarke</em> was wrongly decided and how …

Neo-Brandeisianism And The New Deal: Adolf A. Berle, Jr., William O. Douglas, And The Problem Of Corporate Finance In The 1930s, Jessica Wang

Seattle University Law Review

This essay revisits Adolf A. Berle, Jr. and The Modern Corporation and Private Property by focusing on the triangle of Berle, Louis D. Brandeis, and William O. Douglas in order to examine some of the underlying assumptions about law, economics, and the nature of modern society behind securities regulation and corporate finance in the 1930s. I explore Douglas and Berle’s academic and political relationship, the conceptual underpinnings of Brandeis, Berle, and Douglas’s critiques of modern finance, and the ways in which the two younger men—Berle and Douglas—ultimately departed from their role model, Brandeis.

Enumerating Old Themes? Berle’S Concept Of Ownership And The Historical Development Of English Company Law In Context, Lorraine E. Talbot

Seattle University Law Review

This paper offers some tentative suggestions as to why Berle’s work has been read and interpreted so selectively in the United Kingdom. I suggest that this must be partly attributable to the historical developments in English company law that entrenched the notion of shareholder ownership claims. Specifically, unincorporated associations’ normative values—that members are owners and there is no distinction between small organizations with no share dispersal and large organizations with wide share dispersal—have a continuing influence on this entrenched notion of shareholder ownership claims. First, I provide an overview of the origins of English company law. Next, I address how …

Transcript: Session 2: The Problem Of State Judicial Campaign “Arms Races”—What Can Be Done In The State Legislatures And State Courts?, Chief Justice Shirley Abrahamson, Justice Hans Linde, Jamie Pedersen, Judge David Schuman, Charles Wiggins, Ronald Collins

Seattle University Law Review

Many years ago, when my hair was still thick, this justice spoke at a conference on state court judicial elections. I was not there, but the story goes that when it came to an audience question, an idealistic young man asked this West Virginia supreme court justice: How do you go about becoming a state supreme court justice? Do you have to go to a good law school? Do you have to become involved in the state bar association? Do you have to become involved in civic organizations? Do you have to become a trial judge, then an appellate judge, …

Table Of Contents, Seattle University Law Review

Seattle University Law Review

No abstract provided.

Nothing Natural About It: Still Searching For A Solution To The Chapter 11 Stamp Tax Exemption, Lindsay K. Taft

Seattle University Law Review

In June of 2008, in Florida Department of Revenue v. Piccadilly Cafeterias, Inc., the Supreme Court settled a circuit split and issued a bright line rule stating that asset transfers made prior to the confirmation of a Chapter 11 plan of reorganization no longer benefit from certain tax exemptions. As a result, the cost of selling assets in a bankruptcy case outside of a plan will increase. The provision at issue in the case, which exempts asset transfers and sales from certain state taxes, contains language ambiguous enough that four federal circuit courts have contemplated which types of asset …

Caperton's Amici, Kenneth L. Karst

Seattle University Law Review

In this discussion of the Caperton case, I bring some of the amici curiae to center stage—in recognition of their supporting roles. Ordinarily, at this level, highly competent counsel represent both sides, and they tell the Justices what they need to know in deciding the case. In such circumstances, amici—if they appear at all—are likely to add little of substance. In some cases, the parties’ advocates may fail to explore the available arguments, and briefs amici may be the only well-argued guides to decision.

Caperton lies outside both of these patterns. First-rate counsel on both sides, in their briefs and …

Power Without Property, Still: Unger, Berle, And The Derivatives Revolution, Cristie Ford, Carol Liao

Seattle University Law Review

We are in a time when the notion of property is in flux. The derivatives revolution has shattered the “atom of property” well beyond what was originally imagined in 1932 by Adolf Berle and Gardiner Means. This disaggregation has had fascinating, and often adverse, effects on corporate law and securities regulation. Moreover, the phenomenon has had the unexpected effect of permitting some parties that already possess considerable social, economic, and political power to accumulate even more.

Rethinking The Separation Of Ownership From Management In American History, Kenneth Lipartito, Yumiko Morii

Seattle University Law Review

In <em>The Modern Corporation and Private Property</em>, Adolf Berle and Gardiner Means would use AT&T as a prime example of what they saw as a dangerous new trend, the replacement of ownership-based capitalism with giant corporations controlled by a small group of propertyless managers. Indeed, AT&T became Berle and Means’ favorite example. . . . As we shall see, however, the claim that AT&T was a leading example of the separation of ownership from management is incomplete. More importantly, the common interpretation of Berle and Means’ work is mistaken, placing the emphasis incorrectly on the number of shareholders and reading …

Corporate Power In The Public Eye: Reassessing The Implications Of Berle’S Public Consensus Theory, Marc T. Moore, Antoine Rebérioux

Seattle University Law Review

We analyze Berle’s overall corporate governance project in accordance with what we see as its four core sub-themes: (A) the limitations of external market forces as a constraint on managerial decision-making power; (B) the desirability of internal (corporate) over external (market) actors in allocating corporate capital; (C) civil society and the public consensus as a continuous informal check on managerial decision-making power; and (D) shareholder democracy (as opposed to shareholder primacy or shareholder wealth maximization) as a socially instrumental institution. We seek to debunk the popular misconception that Berle’s early work was a defense of the orthodox shareholder primacy paradigm …

A Call For Judicial Scrutiny: How Increased Judicial Discretion Has Led To Disparity And Unpredictability In Federal Sentencings For Child Pornography, Loren Rigsby

Seattle University Law Review

The United States Sentencing Commission (USSC) has made child pornography related crimes among the most harshly punishable federal offenses. Nevertheless, sentencing judges have regained the right to depart from the recommended Federal Sentencing Guidelines (Guidelines). The Guideline range for child pornography reflects sound and clear congressional intent to impose harsh penalties on defendants to deter, and ultimately eliminate, the market for child pornography. For this reason, this Comment argues that sentences that fall outside the Guidelines range should be reviewed with much greater scrutiny and should not be used solely to reflect a judge’s view that the advised sentence is …

Opening Remarks, Chancellor William B. Chandler Iii

Seattle University Law Review

Law is, in many ways, a backwards-looking field. We litigate over facts that have already occurred, challenge deals that have already been signed, and apply rules of decision based on previously-established precedent or statutes already enacted. To the extent that this Center and the symposium reflect on Berle’s work, they too are an exercise in looking back. Indeed, some might say the establishment of a Center named in Berle’s honor is a monument to the past.

Revisiting Berle And Rethinking The Corporate Structure, Kelli A. Alces

Seattle University Law Review

Adolf Berle and Gardiner Means painted what remains a defining portrait of corporate law. The separation of ownership and control they described and the agency costs it causes are still a central concern of the law of corporate governance. For that reason, Berle’s work is relevant nearly eighty years after its publication. Seemingly forgotten, however, is that Berle’s enduring description of the corporate structure was published before most of today’s corporate law was in place. His work preceded the Securities Act of 1933 and the Securities Exchange Act of 1934 and even preceded the dominance of Delaware common law in …

The Modern Corporation As Social Construction, Mark S. Mizruchi, Daniel Hirschman

Seattle University Law Review

Classic works, Mark Mizruchi and Lisa Fein argued, share a particular fate. Authors often cite classic works without reading them—or without reading them carefully. . . . Yet perhaps no single work fits the above description better than one of the most important books on the large corporation ever published: Adolf Berle and Gardiner Means’s The Modern Corporation and Private Property. One can speculate that few works in the social sciences have been as often cited and as little read. As a consequence, we would expect The Modern Corporation to be a good candidate for either selective interpretation or …

Moral Foundation Theory And The Law, Colin Prince

Seattle University Law Review

Moral foundation theory argues that there are five basic moral foundations: (1) harm/care, (2) fairness/reciprocity, (3) ingroup/loyalty, (4) authority/respect, and (5) purity/sanctity. These five foundations comprise the building blocks of morality, regardless of the culture. In other words, while every society constructs its own morality, it is the varying weights that each society allots to these five universal foundations that create the variety. Haidt likens moral foundation theory to an “audio equalizer,” with each culture adjusting the sliders differently. The researchers, however, were not content to simply categorize moral foundations—they have tied the foundations to political leanings. And it is …

Judicial Selection In Washington—Taking Elections Seriously, William R. Andersen

Seattle University Law Review

The following remarks suggest that the election system for choosing Washington judges is not, in any significant degree, an election system at all. Most Washington judges do not get on the bench by election and elections are rarely used to evaluate sitting judges. Through the quiet adoption of certain practices and customs, citizen voice through elections rarely plays a role. If elections are a good way to select and retain judges—an issue not debated here—important changes in our practices are essential if we are to take elections seriously.

Reform From Within: Positive Solutions For Elected Judiciaries, Chief Justice Wallace Jefferson

Seattle University Law Review

Since my appointment to fill a vacancy on the Texas Supreme Court, I have been a candidate in three judicial elections, each introducing me to the problematic, often confounding, world of judicial politics. In a judicial campaign, the road to victory begins with the solicitation of money. The “ask” is undignified, and the “give” is fairly compelled. To illustrate, consider one common, if not unavoidable, scenario in the campaign of a state court judge:

Receptionist: I’m sorry, Mr. Jefferson, but Mr. Smith is on the phone with a client. May I take a message? Chief Justice Jefferson: Would …