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Full-Text Articles in Law
Purpose Driven Companies In The United States, Alicia E. Plerhoples
Purpose Driven Companies In The United States, Alicia E. Plerhoples
Georgetown Law Faculty Publications and Other Works
The United States is the birthplace of benefit corporations precisely because of American society’s over-reliance on the private sector to solve societal problems. U.S. federal and state regulation continuously fails to provide robust social safety nets or prevent ecological disasters. American society looks to companies to do such work. U.S. social enterprise entities attempt to upend the U.S. legal framework which binds fiduciaries to focus on shareholder value. These entities are permitted, and sometimes required, to take into account environmental, social, and governance (“ESG”) impacts of their operations, essentially internalizing ESG costs that would otherwise be paid by American communities …
Social Enterprise Law: A Theoretical And Comparative Perspective, Rado Bohinc, Jeff Schwartz
Social Enterprise Law: A Theoretical And Comparative Perspective, Rado Bohinc, Jeff Schwartz
Utah Law Faculty Scholarship
This article analyzes social enterprise from a theoretical and comparative perspective. Social enterprises are distinct from nonprofits because they have equity-holders; they are distinct from socially minded for-profits because their mission is sacrosanct. We set out a regulatory template to support entities with this unique hybrid character. Only companies that commit to a mission-centric purpose, and adopt transparency and accountability mechanisms that police faithfulness to this commitment, would be entitled to call themselves “social enterprises.” This narrowly tailored regulatory structure would allow these firms to stand out and attract likeminded consumers and investors.
Neither the US nor the EU offers …
Who Is The Client? Rethinking Professional Responsibility For Benefit Corporations, Joseph Pileri
Who Is The Client? Rethinking Professional Responsibility For Benefit Corporations, Joseph Pileri
Articles in Law Reviews & Other Academic Journals
A growing social enterprise movement has led companies to increasingly opt into the benefit corporation form, and those companies are hiring lawyers. Benefit corporations challenge the notion that corporate law’s primary focus is on furthering shareholder interests. While many have written about the benefit corporation with respect to corporate fiduciary law, this Article is the first to explore the form’s ethical implications for lawyers. Ethical obligations necessarily reflect substantive law governing client organizations; changes to the corporate form presented by benefit corporation legislation should reverberate in legal ethics. The legal profession, however, has not addressed how to lawyer to a …
A Critical Canadian Perspective On The Benefit Corporation, Carol Liao
A Critical Canadian Perspective On The Benefit Corporation, Carol Liao
All Faculty Publications
There has been much fanfare surrounding the possible implementation of a legal model of social enterprise similar to the American benefit corporation in Canada. This article points out that some of the fundamental legal characteristics of the benefit corporation are already reflected in existing Canadian corporate laws, and in some instances Canadian laws are comparatively more progressive. Directors owe fiduciary duties to the best interests of the corporation, and minority protections such as the oppression remedy oblige directors to consider non-shareholder stakeholders. Landmark judgments from Canada’s highest court have affirmed the board requirement to consider stakeholder interests, and that directors …
Sustainable Business, Robert A. Katz, Antony Page
Sustainable Business, Robert A. Katz, Antony Page
Faculty Publications
In recent years lawyers have become increasingly active in the field of for-profit social enterprise and sustainable business. This is nowhere more evident than in the design of new organizational forms such as the low-profit limited liability company (L3C), the flexible purpose corporation, and the benefit corporation. In this emerging field, sustainability is perhaps the most prized quality as well as its most versatile construct. This Essay contributes to the debate over new legal forms by analyzing the multiple meanings of sustainability in this context. The analysis demonstrates the importance of distinguishing between the social enterprise as a dual mission …
Hunting Stag With Fly Paper: A Hybrid Financial Instrument For Social Enterprise, Dana Brakman Reiser, Steven Dean
Hunting Stag With Fly Paper: A Hybrid Financial Instrument For Social Enterprise, Dana Brakman Reiser, Steven Dean
Faculty Scholarship
Social entrepreneurs and socially motivated investors share a belief in the power of social enterprise: ventures that pursue a "double bottom line" of profit and social good. Unfortunately, they also share a deep mutual suspicion. Recognizing that social ventures-just like traditional for-profit and nonprofit enterprises-need capital to flourish, this Article offers a financing tool to transform that skepticism into commitment. Unlike the array of new entities that have emerged in recent years-including L3Cs, benefit corporations, and flexible purpose corporations-the hybrid financial instrument this Article describes provides a robust and transparent solution to the puzzle that lies at the heart of …
The Next Stage Of Csr For Canada: Transformational Corporate Governance, Hybrid Legal Structures, And The Growth Of Social Enterprise, Carol Liao
All Faculty Publications
The period when corporate social responsibility (CSR) only referred to corporate philanthropic donations has passed. Present day CSR is intimately intertwined with sustainable development, and its growth in the last several decades has been evident in Canada. The recent appearance of “hybrid” corporate legal structures on the international stage marks a growing trend toward enabling the dual pursuit of economic and social mandates for businesses. It suggests that the next significant stage in the CSR movement will be in the reformation and creation of corporate legal models that not only enable, but require, CSR concepts to be embodied within corporate …
Social Enterprise: Who Needs It?, Brian Galle
Social Enterprise: Who Needs It?, Brian Galle
Georgetown Law Faculty Publications and Other Works
State statutes authorizing firms to pursue mixtures of profitable and socially-beneficial goals have proliferated in the past five years. In this invited response essay, I argue that for one large class of charitable goals the so-called “social enterprise” firm is often privately wasteful. While the hybrid form is a bit more sensible for firms that combine profit with simple, easily monitored social benefits, existing laws fail to protect stakeholders against opportunistic conversion of the firm to pure profit-seeking. Given these failings, I suggest that social enterprise’s legislative popularity can best be traced to a race to the bottom among states …
Representing Social Enterprise, Alicia E. Plerhoples
Representing Social Enterprise, Alicia E. Plerhoples
Georgetown Law Faculty Publications and Other Works
This article explores the representation of social enterprises—i.e., nonprofit and for-profit organizations whose managersstrategically and purposefully work to create social, environmental, and economic value or achieve a social good through the use of business techniques—in the Social Enterprise & Nonprofit Law Clinic at Georgetown University Law Center. Representation of social enterprises helps create a dynamic curriculum through which law students learn to merge corporate legal theory with transactional law practice. Through service to social enterprises, law students (i) learn about corporate governance and corporate legal theory as well as business models and mechanisms that support social and environmental value creation …
Can An Old Dog Learn New Tricks? Applying Traditional Corporate Law Principles To New Social Enterprise Legislation, Alicia E. Plerhoples
Can An Old Dog Learn New Tricks? Applying Traditional Corporate Law Principles To New Social Enterprise Legislation, Alicia E. Plerhoples
Georgetown Law Faculty Publications and Other Works
Seven U.S. states have recently adopted the benefit corporation or the flexible purpose corporation—two novel corporate forms intended to house social enterprises, i.e., those ventures that pursue social and environmental missions along with profits. And yet, these corporate forms are not viable or sustainable if they do not attract social entrepreneurs or social investors due to the lack of understanding and inquiry into how traditional corporate law principles will be applied to them. This article begins this necessary examination. As a first approach, this article assesses shareholder primacy and the shareholder wealth maximization norm in the context of the sale …
Is Social Enterprise The New Corporate Social Responsibility?, Antony Page, Robert A. Katz
Is Social Enterprise The New Corporate Social Responsibility?, Antony Page, Robert A. Katz
Faculty Publications
Since at least the famous Berle-Dodds debate, corporate social responsibility (CSR) and later its more muscular and structural iteration, progressive corporate law, have been discussed without much progress. The authors consider whether the social enterprise movement, which envisions a new sector of businesses created both to generate profits and pursue social goals, advances this debate. They conclude that it does. Proponents of social enterprise believe that such businesses can combine the dynamism of for-profit firms with the mission-driven zeal more typical of nonprofit organizations. Social enterprise and CSR have much in common: both want businesses to take the interests of …
Freezing Out Ben & Jerry: Corporate Law And The Sale Of A Social Enterprise Icon, Antony Page, Robert A. Katz
Freezing Out Ben & Jerry: Corporate Law And The Sale Of A Social Enterprise Icon, Antony Page, Robert A. Katz
Faculty Publications
Companies with social missions are frequently bought by larger, more conventional profit-seeking firms and just as frequently accused of “selling out.” Ben & Jerry’s Homemade Inc. is perhaps the leading example: its takeover by international conglomerate Unilever is an oft-repeated cautionary tale of the negative proclivities of the publicly-traded corporate form and profit-maximizing corporate law. Contrary to conventional wisdom, however, corporate law did not compel the sale, or sell-out, of Ben & Jerry’s. This familiar account omits a critical part of the narrative -- the company and its founders had established impressive anti-takeover defenses that, when pressed, the board declined …