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Articles 1 - 30 of 36
Full-Text Articles in Law
Soft And Hard Strategies: The Role Of Business In The Crafting Of International Commercial Law, Susan Block-Lieb
Soft And Hard Strategies: The Role Of Business In The Crafting Of International Commercial Law, Susan Block-Lieb
Faculty Scholarship
Part I returns to the classic definition of hard international law initially put forward by Kenneth Abbott and Duncan Snidal and related IR scholars and analyzes existing commercial law treaties in light of this definition. It concludes that virtually none of these commercial law treaties constitute “hard” international law because nearly all commercial law treaties rely on national courts for enforcement. But Abbott and Snidal’s focus on the extent to which international law is legalized—and especially the extent to which it is enforced by international actors—may matter less with commercial than other more public international lawmaking. This is because the …
Correcting Corporate Benefit: How To Fix Shareholder Litigation By Shifting The Doctrine On Fees, Sean J. Griffith
Correcting Corporate Benefit: How To Fix Shareholder Litigation By Shifting The Doctrine On Fees, Sean J. Griffith
Faculty Scholarship
The current controversy in corporate law concerns whether firms can discourage litigation by shifting its cost to shareholders. But corporate law courts have long engaged in fee-shifting—from shareholder plaintiffs to the corporation—under the “corporate benefit” doctrine. This Article examines fee-shifting in share-holder litigation, arguing that current practices are unsound from the perspective of both doctrine and public policy. Unfortunately, the fee-shifting bylaws recently enacted in response to the problem of excessive shareholder litigation fare no better. The Article therefore offers a different approach to fee-shifting, articulating three specific reforms of the corporate benefit doctrine to quell the current crisis in …
Strengthening Charity Law: Replacing Media Oversight With Advance Rulings For Nonprofit Fiduciaries, Linda Sugin
Strengthening Charity Law: Replacing Media Oversight With Advance Rulings For Nonprofit Fiduciaries, Linda Sugin
Faculty Scholarship
This Article considers three urgent challenges facing the charitable community and its state regulators: too little fiduciary duty law for nonprofits, the rise of media enforcement of wrongdoing in charities, and an inherent tension in the state’s dual role as enforcer and protector of the nonprofit sector. It analyzes whether the scarcity of law is really a problem by comparing nonprofit organizations with business organizations and concludes that charities lack the selfenforcement mechanisms of businesses and therefore need more government guidance. It evaluates whether the media has made governmental supervision obsolete and expresses skepticism about the press displacing state oversight. …
Confronting The Peppercorn Settlement In Merger Litigation: An Empirical Analysis And A Proposal For Reform, Jill E. Fisch, Sean J. Griffith, Steven D. Solomon
Confronting The Peppercorn Settlement In Merger Litigation: An Empirical Analysis And A Proposal For Reform, Jill E. Fisch, Sean J. Griffith, Steven D. Solomon
Faculty Scholarship
Shareholder litigation challenging corporate mergers is ubiquitous, with the likelihood of a shareholder suit exceeding 90%. The value of this litigation, however, is questionable. The vast majority of merger cases settle for nothing more than supplemental disclosures in the merger proxy statement. The attorneys that bring these lawsuits are compensated for their efforts with a court-awarded fee. This leads critics to charge that merger litigation benefits only the lawyers who bring the claims, not the shareholders they represent. In response, defenders of merger litigation argue that the lawsuits serve a useful oversight function and that the improved disclosures that result …
Whose Trojan Horse? The Dynamics Of Resistance Against Ifrs, Martin Gelter, Zehra Kavame Eroglu
Whose Trojan Horse? The Dynamics Of Resistance Against Ifrs, Martin Gelter, Zehra Kavame Eroglu
Faculty Scholarship
The introduction of International Financial Reporting Standards (“IFRS”) has been debated in the United States since at least the accounting scandals of the early 2000s. While publicly traded firms around the world are increasingly switching to IFRS, often because they are required to do so by law or by their stock exchange, the Securities Exchange Com-mission (“SEC”) seems to have become more reticent in recent years. Only foreign issuers have been permitted to use IFRS in the United States since 2007. By contrast, the EU has mandated the use of IFRS in the consolidated financial statements of publicly traded firms …
The Omnipresent Specter Of Omnicare, Sean J. Griffith
The Omnipresent Specter Of Omnicare, Sean J. Griffith
Faculty Scholarship
In this Article, written for a symposium commemorating the tenth anniversary of the Delaware Supreme Court’s opinion in Omnicare, Inc. v. NCS Healthcare, Inc., I argue, notwithstanding reports to the contrary, that Omnicare is still very much with us. Although there is a line of cases that qualifies the narrow holding of the opinion, the strong reading of Omnicare, which requires a fiduciary out in every merger agreement and elevates the “unremitting” duty to remain “fully informed” to an absolute jurisprudential principle, lives on in Delaware law, animating the Court of Chancery’s controversial rulings in the recent standstill cases. Shifting …
Unregulated Corporate Internal Investigations: Achieving Fairness For Corporate Constituents, Bruce A. Green, Ellen S. Progdor
Unregulated Corporate Internal Investigations: Achieving Fairness For Corporate Constituents, Bruce A. Green, Ellen S. Progdor
Faculty Scholarship
This article focuses on the relationship between corporations and their employee constituents in the context of corporate internal investigations, an unregulated multi-million dollar business. The classic approach provided in the 1981 Supreme Court opinion, Upjohn v. United States, is contrasted with the reality of modern-day internal investigations that may exploit individuals to achieve a corporate benefit with the government. Attorney-client privilege becomes an issue as corporate constituents perceive that corporate counsel is representing their interests, when in fact these internal investigators are obtaining information for the corporation to barter with the government. Legal precedent and ethics rules provide little relief …
Trademark Cosmopolitanism, Sonia K. Katyal
Trademark Cosmopolitanism, Sonia K. Katyal
Faculty Scholarship
The world of global trademarks can be characterized in terms of three major shifts: first, a shift from national to global branding strategies; second, a shift from national and regional systems to harmonized international regimes governing trademark law; and third, a concurrent shift from local to transnational social movements that challenge branding and other corporate practices. The rise of transnational brands brings with it an attendant series of legal shifts in trademark law. Long considered the stepchild of intellectual property law, today, trademark law has morphed into a powerful global legal phenomenon, revealing a foundational shift from national and regional …
Risk-Shifting Through Issuer Liability And Corporate Monitoring, Martin Gelter
Risk-Shifting Through Issuer Liability And Corporate Monitoring, Martin Gelter
Faculty Scholarship
This article explores how issuer liability re-allocates fraud risk and how risk allocation may reduce the incidence of fraud. In the US, the apparent absence of individual liability of officeholders and insufficient monitoring by insurers under-mine the potential deterrent effect of securities litigation. The underlying reasons why both mechanisms remain ineffective are collective action problems under the prevailing dispersed ownership structure, which eliminates the incentives to moni-tor set by issuer liability. This article suggests that issuer liability could potentially have a stronger deterrent effect when it shifts risk to individuals or entities holding a larger financial stake. Thus, it would …
The Home-State Test For General Personal Jurisdiction, Howard M. Erichson
The Home-State Test For General Personal Jurisdiction, Howard M. Erichson
Faculty Scholarship
This article attempts to articulate the due process test for general in personam jurisdiction. It frames the question as what gives a state sufficiently plenary power over a person that the state may adjudicate claims against the person regardless of where the claims arose, and it answers that question in terms of a home-state relationship between the defendant and the forum state. Written for a roundtable on the upcoming Supreme Court case of DaimlerChrysler AG v. Bauman, the article urges the Court to state the home-state test for general jurisdiction more clearly than it did two years ago in Goodyear …
The Market For Preclusion In Merger Litigation, Sean J. Griffith, Alexandra D. Lahav
The Market For Preclusion In Merger Litigation, Sean J. Griffith, Alexandra D. Lahav
Faculty Scholarship
The recent finding that corporate litigation involving Delaware companies very often takes place outside of Delaware has disturbed the long-settled understanding of how merger litigation works. With many, even most, cases being filed and ultimately resolved outside of Delaware, commentators warn that the trend is a threat to shareholders, to Delaware, and to the integrity of corporate law generally. Although the out-of-Delaware trend suggests that litigants are seeking to use the procedural rules of other jurisdictions to their advantage, we argue that the result need not threaten the interests of any of the stakeholders in deal litigation. We reframe the …
How Collective Settlements Camouflage The Costs Of Shareholder Lawsuits, Richard Squire
How Collective Settlements Camouflage The Costs Of Shareholder Lawsuits, Richard Squire
Faculty Scholarship
Corporations insure against liability in shareholder lawsuits by buying tiered coverage from multiple insurers who each cover a distinct segment of the potential damages range. Rather than negotiating to settle individually with the plaintiff, the insurers seek to reach a single, collectively binding settlement agreement. This combination of segmented coverage and collective settlements produces a conflict of interests: the corporation’s managers and some insurers are better off if the case settles pre-trial for the expected damages, while other insurers are better off going to trial. To force reluctant insurers to settle, courts have created a duty that can require an …
Envisioning Enforcement Of Freedom Of Association Standards In Corporate Codes: A Journey For Sinbad Or Sisyphus?, James J. Brudney
Envisioning Enforcement Of Freedom Of Association Standards In Corporate Codes: A Journey For Sinbad Or Sisyphus?, James J. Brudney
Faculty Scholarship
Since the 1970’s, multinational corporations (MNCs) in large numbers have adopted codes of conduct declaring their commitment to workers’ rights. These codes, however, do not require adherence to specific labor regulations or standards in a global setting. The MNC record on voluntary compliance has been discouraging, especially in labor-intensive industries like apparel, shoes, and toys, where a global supply chain of contractors effectively controls labor conditions. The persistent gap between aspiration and achievement regarding corporate codes has led to disagreement over their meaning and value. MNCs hope to be judged on the basis of the self-regulatory systems they have established. …
Strategic Liability In The Corporate Group , Richard Squire
Strategic Liability In The Corporate Group , Richard Squire
Faculty Scholarship
The typical large corporation divides itself into numerous subsidiaries but then overrides the liability barriers between them by having the subsidiaries and the parent company cross-guarantee each other's major debts. Previous scholarly theories of the corporate group cannot explain why. The leading theory posits that the subsidiaries make it easier for creditors to evaluate risk because they enable each creditor to lend against a discrete asset pool within the broader enterprise. But any such efficiency would be undercut by the guarantees, which transmit credit risk across subsidiary boundaries. This Article argues that the combination of subsidiaries and intragroup guarantees reflects …
Dark Side Of Shareholder Influence: Managerial Autonomy And Stakeholder Orientation In Comparative Corporate Governance , Martin Gelter
Dark Side Of Shareholder Influence: Managerial Autonomy And Stakeholder Orientation In Comparative Corporate Governance , Martin Gelter
Faculty Scholarship
This article proposes a new, functional explanation of the different roles of non-shareholder groups (particularly labor) in different corporate governance systems. The argument depends on the analysis of a factor that has so far received relatively little attention in corporate governance research: the level of shareholder influence on managerial decision making. Pro-employee laws mitigate holdup problems- opportunism from which shareholders benefit ex post, but which will deter firm-specific investment in human capital ex ante. Since holdup takes place within what is considered legitimate managerial business judgment and all shareholders (both majority and minority) are its financial beneficiaries, the degree of …
How The Merits Matter: Directors' And Officers' Insurance And Securities Settlements, Tom Baker, Sean J. Griffith
How The Merits Matter: Directors' And Officers' Insurance And Securities Settlements, Tom Baker, Sean J. Griffith
Faculty Scholarship
This Article seeks what may be the holy grail of securities law scholarship—the role of the "merits" in securities class actions--by investigating the relationship between settlements and directors' and officers' (D&O) liability insurance. Drawing upon in-depth interviews with plaintiffs' and defense lawyers, D&O insurance claims managers, monitoring counsel, brokers, mediators, and testifying experts, we elucidate the key factors influencing settlement and examine the relationship between these factors and notions of merit in civil litigation. We find that, although securities settlements are influenced by some factors that are arguably merit related, such as the "sex appeal" of a claim's liability elements, …
Predicting Corporate Governance Risk: Evidence From The Directors' & Officers' Liability Insurance Market, Tom Baker, Sean J. Griffith
Predicting Corporate Governance Risk: Evidence From The Directors' & Officers' Liability Insurance Market, Tom Baker, Sean J. Griffith
Faculty Scholarship
This Article examines how liability insurers transmit and transform the content of corporate and securities law. Directors' & Officers' (D&O) liability insurers are the financiers of shareholder litigation in the American legal system, paying on behalf of the corporation and its directors and officers when shareholders sue. The ability of the law to deter corporate actors thus depends upon the insurance intermediary. How, then, do insurers transmit and transform the content of corporate and securities law in underwriting D& 0 coverage?In this Article, we report the results of an empirical study of the D&O underwriting process. Drawing upon in-depth interviews …
Constraining Dominant Shareholders' Self-Dealing: The Legal Framework In France, Germany, And Italy , Pierre-Henri Conac, Luca Enriques, Martin Gelter
Constraining Dominant Shareholders' Self-Dealing: The Legal Framework In France, Germany, And Italy , Pierre-Henri Conac, Luca Enriques, Martin Gelter
Faculty Scholarship
All jurisdictions supply corporations with legal tools to prevent or punish asset diversion by those, whether managers or dominant shareholders, who are in control. As previous research has shown, these rules, doctrines and remedies are far from uniform across jurisdictions, possibly leading to significant differences in the degree of investor protection they provide. Comparative research in this field is wrought with difficulty. It is tempting to compare corporate laws by taking one benchmark jurisdiction, typically the US, and to assess the quality of other corporate law systems depending on how much they replicate some prominent features. We take a different …
Introduction Symposium: Nonprofit Law, Economic Challenges, And The Future Of Charities: Introduction, Linda Sugin
Introduction Symposium: Nonprofit Law, Economic Challenges, And The Future Of Charities: Introduction, Linda Sugin
Faculty Scholarship
This Symposium grew out of what I see as the public/private conundrum facing the nonprofit community and the law governing it. Nonprofit organizations are being called upon to better resemble for-profit organizations in a variety of ways. Those calls come from different sources-from donors increasingly interested in results that can be understood in terms parallel to bottom-line assessments to which businesses are accustomed, from cuts in government funding and increased programming that make nonprofits add more businesslike activities to finance their work, and from increasing numbers of for-profit competitors who have been able to mobilize technology and marketing to succeed …
Resisting The Corporatization Of Nonprofit Governance: Transforming Obedience Into Fidelity Symposium: Nonprofit Law, Economic Challenges, And The Future Of Charities: Panel Iv: The Increasing Resemblance Of Nonprofit And Business Organizations Law, Linda Sugin
Faculty Scholarship
It is my privilege, as organizer of this conference, to reflect on the excellent papers published in this issue and the wonderful discussions that they inspired. The presentations left me with the impression that the law of nonprofit governance is moving toward a more corporate model of accountability-a model that emphasizes audits and other formal financial controls, and that focuses enforcement on financial wrongdoing and misuse of charitable funds by directors and managers. Along with these developments, it appears that the legal role of donors in nonprofit governance is growing, increasing donors' ability to impose their vision on the organizations …
The Missing Monitor In Corporate Governance: The Directors' & Officers' Liability Insurer, Tom Baker, Sean J. Griffith
The Missing Monitor In Corporate Governance: The Directors' & Officers' Liability Insurer, Tom Baker, Sean J. Griffith
Faculty Scholarship
This article reports the results of empirical research on the monitoring role of directors' and officers' liability insurance (D&O insurance) companies in American corporate governance. Economic theory provides three reasons to expect D&O insurers to serve as corporate governance monitors: first, monitoring provides insurers with a way to manage moral hazard; second, monitoring provides benefits to shareholders who might not otherwise need the risk distribution that D&O insurance provides; and third, the "bonding" provided by risk distribution gives insurers a comparative advantage in monitoring. Nevertheless, we find that D&O insurers neither monitor corporate governance during the life of the insurance …
Daedalean Tinkering, Sean J. Griffith
Daedalean Tinkering, Sean J. Griffith
Faculty Scholarship
This Review describes David Skeel's account of corporate scandal and evaluates his policy recommendations in his recent book, Icarus in the Boardroom. It argues that although the book provides a compelling history of corporate scandal, its focus on federal responses to scandal--from the enactment of the Interstate Commerce Act to the Sarbanes-Oxley Act--misses an important part of the story. As corporate law scholars have long pointed out, corporations exist within a network of constraints, based in part on law and in part on markets, norms, and other non-legal sanctions. Because it omits any sustained discussion of the reaction of these …
Judicial Federalism In The Ecj's Berlusconi Case: Toward More Credible Corporate Governance And Financial Reporting Recent Development, Martin Gelter, Mathias M. Siems
Judicial Federalism In The Ecj's Berlusconi Case: Toward More Credible Corporate Governance And Financial Reporting Recent Development, Martin Gelter, Mathias M. Siems
Faculty Scholarship
In recent years, the general public in many countries has become increasingly aware of issues concerning business accounting and financial reporting. Americans hardly need to be reminded of the Enron debacle, where members of the company's senior management engaged in fraudulent off-balance sheet transactions to disguise the true state of the company's financial condition, a scheme that auditors failed to uncover until the company's implosion. This and other major corporate governance cases involving questionable or fraudulent accounting practices led to the Sarbanes-Oxley Act of 2002. This law was an unprecedented Congressional intervention into corporate governance, an arena that had previously …
Structure Of Regulatory Competition In European Corporate Law, The , Martin Gelter
Structure Of Regulatory Competition In European Corporate Law, The , Martin Gelter
Faculty Scholarship
In its opinions in the cases Centros, Uberseering and Inspire Art, the ECJ has begun to open European corporate law for regulaton of competition, as it has been discussed in the US for several ldecades. This article analyses the stuictual conditions of competition on the supply and demand sides of the market for corporate law, and the impact of supranational influence. In doing so, it identifies several factors that have received little attention in the incipient European debate. The supply-side analysis shows that a European Delaware is implausible because of the interdependence of competitive advantages and the incentives to compete. …
Good Faith Business Judgment: A Theory Of Rhetoric In Corporate Law Jurisprudence, Sean J. Griffith
Good Faith Business Judgment: A Theory Of Rhetoric In Corporate Law Jurisprudence, Sean J. Griffith
Faculty Scholarship
This Article develops a theory of rhetoric in corporate law jurisprudence. It begins by examining a recent innovation in Delaware case law: the emerging principle of “good faith.” Good faith is an old notion in law generally, but it offers to bring significant change to corporate law, including realignment of the business judgment rule and a shift in the traditional balance between the authority of boards and the accountability of boards to courts. This Article argues, however, that good faith functions as a rhetorical device rather than a substantive standard. That is, it operates as a speech act, a performance, …
Uncovering A Gatekeeper: Why The Sec Should Mandate Disclosure Of Details Concerning Directors' And Officers' Liability Insurance Policies, Sean J. Griffith
Uncovering A Gatekeeper: Why The Sec Should Mandate Disclosure Of Details Concerning Directors' And Officers' Liability Insurance Policies, Sean J. Griffith
Faculty Scholarship
This Article explores the connection between corporate governance and directors’ and officers’ (D&O) insurance. It argues that D&O insurers act as gatekeepers and guarantors of corporate governance, screening and pricing corporate governance risks to maintain the profitability of their risk pools. As a result, in a well-working insurance market, D&O insurance premiums would convey the insurer's assessment of a firm's governance quality. Simply stated, firms with better corporate governance would pay relatively low D&O premiums, while firms with worse corporate governance would pay more. This simple relationship could signal important information to investors and other capital market participants. Unfortunately, the …
Law And The Rise Of The Firm , Henry Hansmann, Reiner Kraakman, Richard Squire
Law And The Rise Of The Firm , Henry Hansmann, Reiner Kraakman, Richard Squire
Faculty Scholarship
Organizational law empowers firms to hold assets and enter contracts as entities that are legally distinct from their owners and managers. Legal scholars and economists have commented extensively on one form of this partitioning between firms and owners: namely, the rule of limited liability that insulates firm owners from business debts. But a less-noticed form of legal partitioning, which we call "entity shielding," is both economically and historically more significant than limited liability. While limited liability shields owners' personal assets from a firm's creditors, entity shielding protects firm assets from the owners' personal creditors (and from creditors of other business …
New Business Entities In Evolutionary Perspective, Henry Hansmann, Reiner Kraakman, Richard Squire
New Business Entities In Evolutionary Perspective, Henry Hansmann, Reiner Kraakman, Richard Squire
Faculty Scholarship
The new types of business forms that have developed over the past thirty years all combine the freedom of contracting that is traditional to the partnership with the pattern of creditors' rights that is traditional to the business corporation. Legal scholars differ on the issue of whether these new business forms are more partnership-like or corporation-like. Those taking the partnership-like view argue that the degree of freedom of contract is the essential difference between the traditional corporation and partnership forms, while those adhering to the corporation-like view argue that the pattern of creditors' rights is the essential difference. The authors …
Qualified Legal Compliance Committee: Using The Attorney Conduct Rules To Restructure The Board Of Directors, The Thirty-Third Annual Administrative Law Issue Agencies, Economic Justice, And Private Initiatives, Jill E. Fisch, Caroline M. Gentile
Qualified Legal Compliance Committee: Using The Attorney Conduct Rules To Restructure The Board Of Directors, The Thirty-Third Annual Administrative Law Issue Agencies, Economic Justice, And Private Initiatives, Jill E. Fisch, Caroline M. Gentile
Faculty Scholarship
The Securities and Exchange Commission introduced a new corporate governance structure, the qualified legal compliance committee, as part of the professional standards of conduct for attorneys mandated by the Sarbanes-Oxley Act of 2002. QLCCs are consistent with the Commission's general approach to improving corporate governance through specialized committees of independent directors. This Article suggests, however, that assessing the benefits and costs of creating QLCCs may be more complex than is initially apparent. Importantly, QLCCs are unlikely to be effective in the absence of incentives for active director monitoring. This Article concludes by considering three ways of increasing these incentives.
The Costs And Benefits Of Precommitment: An Appraisal Of Omnicare V. Ncs Healthcare, Sean J. Griffith
The Costs And Benefits Of Precommitment: An Appraisal Of Omnicare V. Ncs Healthcare, Sean J. Griffith
Faculty Scholarship
The Decision of the Delaware Supreme Court in Omnicare v. NCS Healthcare raises concerns regarding the efficiency of Delaware law from the perspective of shareholder welfare maximization and engages the emerging literature on corporate precommitments. The clash between the majority and dissenting opinions offers competing visions of the basic corporate law separation of powers issue--that is, board versus shareholder primacy. This Article engages in a close analysis of the Omnicare opinion, focusing on its doctrinal foundations as well as its policy implications. After this introduction, Part II provides a brief overview of the relevant factual and legal background. Part III …