Law Commons^™

Interpretive Entrepreneurs, Melissa J. Durkee

Scholarly Works

Private actors interpret legal norms, a phenomenon I call "interpretive entrepreneurship." The phenomenon is particularly significant in the international context, where many disputes are not subject to judicial resolution and there is no official system of precedent. Interpretation can affect the meaning of laws over time. For this reason, it can be a form of "post hoc" international lawmaking, worth studying alongside other forms of international lobbying and norm entrepreneurship by private actors. The Article identifies and describes the phenomenon through a series of case studies that show how, why, and by whom it unfolds. The examples focus on entrepreneurial …

From Property Rights To Liberty Rights: We The Corporations, A Review Essay, Laura Phillips-Sawyer

Scholarly Works

A long-standing, and deeply controversial, question in constitutional law is whether or not the Constitution's protections for “persons” and “people” extend to corporations. Law professor Adam Winkler's We the Corporations chronicles the most important legal battles launched by corporations to “win their constitutional rights,” by which he means both civil rights against discriminatory state action and civil liberties enshrined in the Bill of Rights and the Constitution (p. xvii). Today, we think of the former as the right to be free from unequal treatment, often protected by statutory laws, and the latter as liberties that affect the ability to live …

Do Conflicts Of Interest Require Outside Boards? Yes. Bsps? Maybe., Usha Rodrigues

Scholarly Works

From the Symposium: Outsourcing the Board: How Board Service Providers Can Improve Corporate Governance

Boards of directors are curious creatures. The law generally requires corporations to have them—indeed, they are the focus of the corporate law we teach in Business Associations in U.S. law schools. The corporation is managed by directors or under their direction; directors hire and fire officers; directors are necessary for fundamental transactions.

But the reason why corporations have directors is not entirely clear. In the prototypical privately held corporation, the family firm, the same individuals serve both as directors and officers. The CEO (better known as …

Book Review: Global Lawmakers: International Organizations In The Crafting Of World Markets By Susan Block-Lieb And Terence C. Halliday, Melissa J. Durkee

Scholarly Works

Susan Block-Lieb and Terence Halliday gradually build up an empirically grounded, meticulously realized argument that individual lawmakers matter. When one allows facts to inform theory rather than the other way around, the authors show, what becomes clear is that individual lawmakers are not just governmental delegates, but a whole variety of professionals, industry association representatives, and others with some stake in the lawmaking process. These actors work not just through formal processes, but also through an array of informal ones. Most importantly, their presence matters to the content of the legal norms that take hold around the world. The book …

Law And The Blockchain, Usha Rodrigues

Scholarly Works

All contracts are necessarily incomplete. The inefficiencies of bargaining over every contingency, coupled with humans’ innate bounded rationality, mean that contracts cannot anticipate and address every potential eventuality. One role of law is to fill gaps in incomplete contracts with default rules. The blockchain is a distributed ledger that allows the cryptographic recording of transactions and permits “smart” contracts that self-execute automatically if their conditions are met. Because humans code the contracts of the blockchain, gaps in these contracts will arise. Yet in the world of “smart contracting” on the blockchain, there is no place for the law to step …

International Lobbying Law, Melissa J. Durkee

Scholarly Works

An idiosyncratic array of international rules allows nonstate actors to gain special access to international officials and lawmakers. Historically, many of these groups were public-interest associations like Amnesty International. For this reason, the access rules have been celebrated as a way to democratize international organizations, enhancing their legitimacy and that of the rules they produce. But a focus on the classic public-law virtues of democracy and legitimacy produces a theory at odds with the facts: The international rules rules also offer access to industry and trade associations like the World Coal Association, whose principal purpose is to lobby for their …

Astroturf Activism, Melissa J. Durkee

Scholarly Works

Corporate influence in government is more than a national issue; it is an international phenomenon. For years, businesses have been infiltrating international legal processes. They secretly lobby lawmakers through front groups: “astroturf” imitations of grassroots organizations. But because this business lobbying is covert, it has been underappreciated in both the literature and the law. This Article unearths the “astroturf activism” phenomenon. It offers an original descriptive account that classifies modes of business access to international officials and identifies harms, then develops a critical analysis of the laws that regulate this access. I show that the perplexing set of access rules …

A Conflict Primacy Model Of The Public Board, Usha Rodrigues

Scholarly Works

e board of directors is the theoretical fulcrum of the corporate form: Statutes task the board with managing the corporation. Yet in the twentieth century, CEOs and other executives came to dominate the real-world control of the corporation. In light of this transformation, in the 1970s Melvin E. Eisenberg proposed reconceiving the board as an independent monitor. Eisenberg’s monitoring board is now the dominant regulatory model of the board. Recently two different visions of the board of directors have emerged. Stephen Bainbridge’s “director primacy” model calls directors “Platonic guardians,” and Margaret Blair and Lynn Stout’s “team production model” characterizes them …

Securities Law's Dirty Little Secret, Usha Rodrigues

Scholarly Works

Securities law’s dirty little secret is that rich investors have access to special kinds of investments—hedge funds, private equity, private companies—that everyone else does not. This disparity stems from the fact that, from its inception, federal securities law has jealously guarded the manner in which firms can sell shares to the general public. Perhaps paternalistically, the law assumes that the average investor needs the protection of the full panoply of securities regulation and thus should be limited to buying public securities. In contrast, accredited—i.e., wealthy— investors, who it is presumed can fend for themselves, have the luxury of choosing between …

Reconsidering The Separation Of Banking And Commerce, Mehrsa Baradaran

Scholarly Works

This Article examines the long-held belief that banking and commerce need to be kept separate to ensure a stable banking system. Specifically, the Article criticizes the Bank Holding Company Act (“BHCA”), which prohibits nonbanking entities from owning banks. The recent banking collapse has caused and exacerbated several problematic trends in U.S. banking, especially the conglomeration of banking entities and the homogenization of assets. The inflexible and outdated provisions of the BHCA are a major cause of these trends. Since the enactment of the BHCA, the landscape of U.S. banking has changed dramatically, but the strict separation of banking and commerce …

From Loyalty To Conflict: Addressing Fiduciary Duty At The Officer Level, Usha Rodrigues

Scholarly Works

Conflicts of interest are the quintessential agency cost-the constant, lurking danger that agents may seek their own personal gain, rather than the good of the corporation. Yet many corporate employees lack knowledge as to exactly what constitutes a conflict of interest. This ignorance facilitated the kind of fraud seen in Enron, WorldCom, and the options backdating scandals, and may help explain the out-sized payouts that many high-level corporate officers received even as the financial institutions they headed verged on self-destruction. Each case required not only affirmative fraudulent behavior on the part of a few, but also the tacit acceptance of …

The Fetishization Of Independence, Usha Rodrigues

Scholarly Works

According to conventional wisdom, a supermajority independent board of directors is the ideal corporate governance structure. Debate nevertheless continues: empirical evidence suggests that independent boards do not improve firm performance. Independence proponents respond that past studies reflect a flawed definition of independence.

Remarkably, neither side in the independence debate has looked to Delaware, the preeminent state source for corporate law. Comparing Delaware's notions of independence with those of Sarbanes-Oxley and its attendant reforms reveals two fundamentally different conceptions of independence. Sarbanes-Oxley equates independence with outsider status. An independent director is one who lacks financial ties to the corporation and is …

The State Of The Judiciary: A Corporate Perspective, Larry D. Thompson, Charles J. Cooper

Scholarly Works

The rule of law depends on highly talented, independent judges who conscientiously strive to ensure that the law is consistently applied in a principled and predictable manner. This Essay addresses two potential threats to judicial independence and the rule of law that we believe warrant special attention at this time. First, inadequate judicial salaries pose a threat to the quality and independence of the judiciary. Judges' real pay has declined substantially over the past generation, even as the compensation of other callings within the legal profession has risen dramatically. This growing disparity in pay has prompted an increasing number of …

Venture Capital, Agency Costs, And The False Dichotomy Of The Corporation, Robert P. Bartlett

Scholarly Works

An implicit dichotomy of the corporation exists in legal scholarship. On one side of the dichotomy rests the publicly held corporation suffering from a significant conflict of interest between its managers and dispersed shareholders; on the other side, the closely held corporation plagued by intershareholder conflict. This Article argues that understanding the agency problems that can exist within a firm demands a rejection of this traditional dichotomy and the theories of the firm built upon it. Using venture capital (VC) finance, this Article demonstrates how this dichotomy obscures how all firms -- public and private -- often face the same …

The Seductive Comparison Of Shareholder And Civic Democracy, Usha Rodrigues

Scholarly Works

This Comment takes the common comparison of shareholder democracy and political democracy in a new direction by exploring the parallels between the board of directors and the Electoral College, examining both institutions in light of the differences between nation and corporation and their contrasting histories. Both are "once removed" representative democracies, because both systems only give the voters the right to vote for representatives who then select those who actually govern. The Comment next considers, with a critical eye, the underlying premise that shareholder and civic democracies can be compared at all, given the radically different nature of the corporate …

Women In Corporate Law Teaching: A Tale Of Two Generations, Margaret V. Sachs

Scholarly Works

This Article is divided into three parts. Part I focuses on [Margaret Harris] Amsler and Part II addresses the second generation. Part III explores a question that was prompted by the second generation and that goes to the heart of this Symposium: Do women corporations professors damage their standing in the academic community by examining the interface between corporate law and gender?

Accountability Of Transnational Corporations Under International Standards, Lea Hanakova

LLM Theses and Essays

Due to the process of globalization and rapid economic evolution in the last several years, transnational corporations have become extremely powerful. There is an evident disproportion between the numerous rights enjoyed by transnational corporations and the scarce obligations undertaken by them. Given their transnational nature, transnational corporations have been successfully avoiding national regulations of both their home and host states, and they are seeking to operate in countries with the lowest standards so as to increase their profits. This has resulted in the violation of basic human rights. Therefore, there is an increasing need for the creation of international instruments …

Fiduciary Duties Of Directors In The Context Of Going-Private Transactions To The Minority Shareholders Under Delaware Law, Yuan Wang

LLM Theses and Essays

This thesis discusses the different fiduciary duties and standards of review imposed by Delaware laws on the directors to the minority shareholders in the going-private transactions structured either as a merger or as a tender offer voluntarily initiated by the controlling In the context of a merger, the disinterested and independent directors will face a duty of care and be subject to the business judgment rule. For the interested or dependent directors, they will bear a duty of loyalty and be bound to the entire fairness standard accordingly. In the case of a tender offer, currently the Delaware courts impose …

Mergers And Acquisitions In Europe: Analysis Of Ec Competition Regulations, Youngjun Lee

LLM Theses and Essays

This paper analyzes three competition regulations in the European Community—article 85 and 86 of the EC Treaty and the EC Merger Regulation. Specifically, article 85 focuses on the market structure and article 86 focuses on the market dominance. The paper explores the Merger Regulation, its objectives and its scope. The amendment to the Merger Regulation extending its scope to include smaller-scale mergers and cooperative joint ventures is explained. The paper concludes with the extraterritoriality of the EC competition regulations.

International Corporate Governance Practices And Their Implications On Investors, Namwandi Hamanyanga

LLM Theses and Essays

Corporate governance has become a bonafide subset of company’s law that is concerned with who directs the company and for whose benefit. Its application varies in countries found in the main legal jurisdictions of common and civil law. This thesis identifies these differences by highlighting national corporate governance systems existing in Germany, Japan, United Kingdom and United States. Together, these countries represent systems adopted by several countries located on all continents. Increased cross border investment in this era of globalization has been significantly affected by these governance systems. The thesis shows the reasons why investors, multinational corporations and nations have …

Lawyers' Value In Mergers And Acquisitions Under The New World Of Multidisciplinary Practices, Yunling Wu

LLM Theses and Essays

Lawyers are facing strong competition from accounting firms in mergers and acquisitions. Finance and accounting globalization and multidisciplinary practice makes accounting firms more competent, challenging lawyers’ value. However, lawyers create enormous value in mergers and acquisitions, such as structuring the form of transactions, managing due diligence investigation, reducing the costs of acquiring and verifying information, ensuring corporations follow the relevant regulations preventing legal liabilities, and preventing antitrust issues or invoking antitrust challenge. Teamwork will facilitate mergers and acquisitions transactions. Restricted multidisciplinary practice will not affect lawyers’ and accountants’ ethics and independence. Legal education should be improved to help lawyers become …

Corporate Distributions To Shareholders In Delaware And In Israel, Anat Urman

LLM Theses and Essays

This thesis considers the corporate legal systems of Israel and Delaware as they address the subject of corporate distributions to shareholders. The thesis reviews the significance of cash dividends and the acquisition by corporations of their own stock, in the management and survival of corporations, the effect they have on the disposition of creditors, and the extent to which they are restricted by operation of law. The thesis demonstrates how dividends and share repurchases may translate into a transfer of value from creditors to shareholders. It considers the effectiveness of the legal capital in securing creditors’ interest, and concludes that …

Capital Punishment: Corporate Criminal Liability For Gross Violations Of Human Rights, Diane Marie Amann

Scholarly Works

These remarks were presented on February 24, 2001, in a panel concluding a conference entitled "Holding Multinational Corporations Responsible Under International Law" at Hastings College of the Law, San Francisco, California.

Delaware Corporation Law And Transaction Cost Engineering, Charles R.T. O'Kelley

Scholarly Works

I have a passionate belief that a very good way to teach Corporations is to structure the course around a core goal--to teach Delaware corporate law systematically--not just bits and pieces of it, but the entire system, much the way we approach the teaching of constitutional law. This Essay is an elaboration of my reasoning and strategies, organized as a presentation and discussion of the core rationales for organizing the course in this way. The first justification flows axiomatically from the following proposition: we create value for many of our students, and harm none, by giving them an opportunity to …

Foreword: The Many Passions Of Teaching Corporations, Charles R.T. O'Kelley

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This Symposium belies such skeptical views of the Corporations course and those of us who teach it. The 1999 Teaching Corporate Law Conference was organized around teachers' self-identified passions in teaching Corporations--the themes, insights, skills or puzzles about which they are most intrigued or enthused. Thirty-seven professors made presentations at the Conference; twenty-eight have converted their presentations into the essays in this Symposium edition, which have been grouped substantively rather than in the exact order presented at the Conference.

Filling Gaps In The Close Corporation Contract: A Transaction Cost Analysis, Charles R.T. O'Kelley

Scholarly Works

This Article develops a more refined transaction-cost based theory which explains: why rational investors in jointly owned, closely held firms initially choose corporate form; why they leave the contractual gaps that they do; and how efficiency-minded judges should respond to postharmony disputes made possible by the form chosen and the gaps left. My theory takes into account not only the possibility that investors should have chosen partnership law, but also the advantages and disadvantages of organizing production as an implicit team, via long-term contracts between separate businesses or as a sole proprietorship. In explicating this theory of form choice, the …

Corporate Social-Reform, The Business Judgment Rule And Other Considerations, Robert N. Leavell

Scholarly Works

In recent years there has been a well-publicized movement to induce corporations to use their economic wealth and power to achieve "social-reform," rather than carry on as usual by professing to be guided only by profit-making. Social change is sought by allowing shareholders to make, or influence directly, those management decisions which significantly affect the quality of life in this country. This approach has found support on college campuses and among the commentators in this field. The Securities Exchange Commission and the courts also have endorsed this approach by legitimating such a role for shareholders despite the fact that it …

Corporate Distributions And The Income Tax: A Consideration Of The Inconsistency Between Subchapter C And Its Underlying Policy, Charles R.T. O'Kelley

Scholarly Works

This Article suggests that although one part of a corporate distribution may be analogous to a sale and the remainder to a dividend, there is no overlap of, or competition between, analogies. This lack of overlap is apparent when one realizes that a dividend and a sale are methods of realizing different types of gain, rather than alternative methods of realizing the same type of gain. This Article examines the basic conceptual model underlying the present system of taxing corporate distributions, describes the appropriate treatment of corporate distributions that is suggested by an understanding of the underlying concepts, and indicates …

The Constitutional Rights Of Corporations Revisited: Social And Political Expression And The Corporation After First Nationial Bank V. Bellotti, Charles R.T. O'Kelley

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The Supreme Court has addressed only a few occasions the extent to which corporations enjoy those constitutional rights so fundamental to private citizens. In this article Professor O'Kelley discusses the inherent difficulty in applying familiar constitutional principles to corporations and examines those cases in which the Supreme Court has either extended or denied to corporations various constitutional rights. Finding that two underlying conceptual doctrines -- the Field rational and the associational rationale -- have guided the Court in previous decisions in this area, he then applies these doctrines in an analysis of the recent Supreme Court decision in First National …

The Texas Gulf Sulphur Opinion In The Appellate Court: An Open Door To Federal Control Of Corporations, Robert N. Leavell

Scholarly Works

The United States Court of Appeals for the Second Circuit has written an opinion in the Texas Gulf Sulphur case which seems to me unfortunate and in large part unnecessary. This comment is a brief statement of why I feel this to be the case.