Law Commons^™

Reinventing The Outside Director: An Agenda For Institutional Investors, Ronald J. Gilson, Reinier Kraakman

Faculty Scholarship

Managerialist rhetoric puts the institutional investor between a rock and a hard place. The institutional investor is depicted as a paper colossus, alternatively greedy and mindless, but in all events a less important corporate constituency than that other kind of investor, the "real" shareholder. The unspoken corollary is that, regardless of the institution's investment strategy, its interests may appropriately be ignored.

An institution that trades stock frequently is considered a short-term shareholder without a stake in the future of the corporation. According to the familiar argument, the short-term shareholder has no more legitimate claim on management's attention than does a …

Liquidity Versus Control: The Institutional Investor As Corporate Monitor, John C. Coffee Jr.

Faculty Scholarship

Within academia, paradigm shifts occur regularly, some more important than others. As the takeover wave of the 1980s ebbs, a significant shift now appears to be in progress in the way the public corporation is understood. Above all, the new thinking emphasizes that political forces shaped the modern corporation. While the old paradigm saw the structure of the corporation as the product of a Darwinian competition in which the most efficient design emerged victorious, this new perspective sees political forces as constraining that evolutionary process and possibly foreclosing the adoption of a superior organizational form. Thus, my colleague Professor Mark …

Shareholder Initiative: A Social Choice And Game Theoretic Approach To Corporate Law, Jeffrey N. Gordon

Faculty Scholarship

When it comes to specific business matters, it seems that an objecting shareholder can do no more than offer a "precatory" resolution that provides shareholder advice on the issue. Adoption of such a resolution obviously sends a strong signal to management, as do informal contacts by important shareholders, that a management seeking to avoid a control contest may be well-advised to heed. Nevertheless, management can ignore such expressions of shareholder. preference and, indeed, can pursue policies and extraordinary transactions that it knows shareholders would reject. Thus for the large public corporation the pattern of delegation gives management virtually unbounded decisionmaking …

Privatization In Eastern Europe: Impractical, But Not Impossible, Andrzej Rapaczynski

Faculty Scholarship

The most important thing that must be understood by anyone thinking about Eastern European privatization is that the word "privatization," although correct, is somewhat misleading. It is misleading because it brings to mind the operations performed in many other countries where state-owned companies have been sold to private individuals. It is very important to understand that the significance of privatization and the practicality of privatization in Eastern Europe are quite different. The most important thing is that the main task of privatization is not to transfer ownership from one party to another-like that successfully done in England-but rather to create …

The Meaning Of Dissent, Lee C. Bollinger

Faculty Scholarship

There is, and has always been, an abiding tension in first amendment theory. At times, freedom of speech is conceived as having a very practical purpose – as implementing a system designed for yielding truth, or good public policy. Thus, Zechariah Chafee wrote that the first amendment protects the "social interest in the attainment of truth, so that the country may not only adopt the wisest course of action but carry it out in the wisest way," and Alexander Meiklejohn spoke frequently of the first amendment as a practical plan for a self-governing society, engendering "wise decisions." This vision of …

Unlimited Liability And Law Firm Organization: Tax Factors And The Direction Of Causation, Ronald J. Gilson

Faculty Scholarship

In a recent issue of this Journal, Carr and Mathewson (1988) test a model of the impact of limited and unlimited liability regimes on the nature of firms by comparing the performance of law firms operated as partnerships and sole proprietorships (and therefore subject to unlimited liability) with that of law firms operated as corporations (and therefore subject to limited liability).

Justice Brennan, Peter L. Strauss

Faculty Scholarship

The editors of the St. John's Law Review have given me the boon of a few pages in which to celebrate Justice Brennan with you. The problem for a former law clerk, for anyone who has known this man, is to know where to begin, and how to keep the appreciation within manageable compass.

International Human Rights Law In Soviet And American Courts, Lori Fisler Damrosch

Faculty Scholarship

To what extent should domestic courts apply international law – specifically the international law of human rights? I would like to examine this question with reference to two very different states: the Union of Soviet Socialist Republics and the United States. For quite distinct reasons, neither of the two has yet fully embraced the idea of direct application in national tribunals of the body of international law that regulates the relationship between human beings and their own governments. As the post-Cold War era unfolds, it is time to ask whether either or both of these erstwhile adversaries might finally be …

The Trouble With Legal Ethics, William H. Simon

Faculty Scholarship

Legal ethics is a disappointing subject. From afar, it seems exciting; it promises to engage the central normative commitments that make lawyering a profession and that account for much of the nonpecuniary appeal of the lawyer's role. Thus, when people see public spirit among lawyers threatened by commercial self-seeking, they often prescribe increased attention to the teaching and -discussion of legal ethics as a remedy.

But close up, legal ethics usually turns out to be dull and dispiriting. At most law schools, students find the course in legal ethics or professional responsibility boring and insubstantial, and faculty dread having to …

Lawyer Advice And Client Autonomy: Mrs. Jones's Case, William H. Simon

Faculty Scholarship

In one influential view, the lawyer's most basic function is to enhance the autonomy of the client. The lawyer does this by providing the information that maximizes the client's understanding of his situation and minimizes the influence of the lawyer's personal views.

This autonomy or "informed consent" view is often contrasted with a paternalist or "best interest" view most strongly associated with official decisions about children and the mentally disabled. Here the professional's role is to make decisions for the client based on the professional's view of the client's interests.

I am going to argue against the autonomy view that …

Plenary Session: The U.S. Constitution In Its Third Century: Foreign Affairs – Remarks By Lori Fisler Damrosch, Lori Fisler Damrosch

Faculty Scholarship

Our Moderator has asked us to look ahead into the Constitution's third century and anticipate the emerging issues. I believe the changes in the field that I have selected, international organizations and institutions, are likely to be dramatic, perhaps more so than the more incremental changes in the areas being addressed by my copanelists. With all respect to our Moderator, I would like to take note of the rather modest treatment given to international organizations in the leading work on foreign affairs and the Constitution published by Louis Henkin in 1972. I hope he will forgive me if I suggest …

Ronald V. Dellums V. George Bush (D.D.C. 1990): Memorandum Amicus Curiae Of Law Professors, Bruce A. Ackerman, Abram Chayes, Lori Fisler Damrosch, John Hart Ely, Erwin N. Griswold, Gerald Gunther, Louis Henkin, Harold Hongju Koh, Philip B. Kurland, Laurence H. Tribe, William W. Van Alstyne

Faculty Scholarship

This joint memorandum is submitted to the court hearing Dellums v. Bush. This amicus brief advocates that the President may not order American armed forces to make war without consultation with and approval by Congress. The brief also argues that the case is justiciable.

Legal Process And Judges In The Real World, Peter L. Strauss

Faculty Scholarship

It is gratifying, reading through a paper and noting here and there points that you might like to make, to find that by the end the author has anticipated them and made them well. This paper sneaks up on you. If at the outset it seems to be accepting that Justice Scalia has a jurisprudence of statutory interpretation that coheres and restrains, by the end it has shown the self-contradictions and decidedly political and institutional stakes in the textualist position the Justice appears to have been carving out for himself.

I am not going to address Professor Zeppos's account of …

Constitutional Politics In Poland: A Report On The Constitutional Committee Of The Polish Parliament, Andrzej Rapaczynski

Faculty Scholarship

This Article is neither a comprehensive historical account of the work of the Constitutional Committee of the Polish Parliament nor a theoretical synthesis of recent constitutional developments in Poland. Rather, it is a mixture of theory, anecdote, and personal reminiscence that I feel at this point most capable of providing. As will be seen, the work on the new Polish constitution has in some ways been overtaken by events that unfortunately have always lurked in the background of the drafters' work and influenced their decisions. In fact, it is not clear that Poland will enact anything resembling the draft prepared …

Morality As Interpretation, Joseph Raz

Faculty Scholarship

With the growing interest in interpretation as an activity essential in the study of the arts and of society it was inevitable that the question of the relation between morality and interpretation would attract considerable interest. Given that moral views and arguments are expressed in language, are essentially language bound, there is no doubt that the understanding of moral views and argument involves, at least at times, interpretation (of arguments and propositions, etc.). The same can be said of physics. The question is whether morality is interpretative in a way in which physics is not. Some writers have claimed that …

A Normative Theory Of Public Law Remedies, Susan Sturm

Faculty Scholarship

The remedial process in public law litigation is a practice in search of a theory. Courts are actively engaged in attempting to remedy violations of constitutional and statutory norms in complex organizational settings. The traditional adversary conception of adjudication has proven inadequate to the task of structuring remedies and promoting compliance in these settings. In response, lawyers, judges, and litigants are employing a variety of innovative roles and processes that do not conform to the accepted adjudicative ideal. Remedial activity in public law litigation frequently entails negotiation, informal dialogue, ex parte communication, broad participation by actors who are not formally …

Sunstein, Statutes, And The Common Law – Reconciling Markets, The Communal Impulse, And The Mammoth State, Peter L. Strauss

Faculty Scholarship

Professor Cass Sunstein's new book, After the Rights Revolution: Reconceiving the Regulatory State, builds upon, and in important ways seeks to integrate, much of Professor Sunstein's work over the past several years. He has been one of our most prolific and influential writers on issues of governmental structure, approaching the subject both from more or less conventional administrative law perspectives and from the constitutional perspectives of separation of powers. His work has dealt with a tension often addressed in the literature, that between the eighteenth-century Madisonian constitutional engine of limited, internally checked government and the realities of our sprawling …

Voice, Not Choice, James S. Liebman

Faculty Scholarship

In John Chubb and Terry Moe's book, choice is hot; voice is not. As influential as their book has become in current policy debates, however, its data and reasoning may support policies the reverse of those that the authors and their "New Paradigm" disciples propose. In this review, voice is hot; choice is not.

Does "Unlawful" Mean "Criminal"?: Reflections On The Disappearing Tort/Crime Distinction In American Law, John C. Coffee Jr.

Faculty Scholarship

What sense does it make to insist upon procedural safeguards in criminal prosecutions if anything whatever can be made a crime in the first place?
—Professor Henry M. Hart, Jr.

My thesis is simple and can be reduced to four assertions. First, the dominant development in substantive federal criminal law over the last decade has been the disappearance of any clearly definable line between civil and criminal law. Second, this blurring of the border between tort and crime predictably will result in injustice, and ultimately will weaken the efficacy of the criminal law as an instrument of social control. Third, …

Federal Statutory Review Under Section 1983 And The Apa, Henry Paul Monaghan

Faculty Scholarship

Following hard on the heels of two unanimous decisions sustaining the authority of state courts to enforce federal law, two more unanimous rulings at the end of the 1989 Supreme Court Term strongly emphasized their duty to do so. McKesson Corporation v. Division of Alcoholic Beverages & Tobacco, held that the states must provide meaningful postpayment remedies for parties forced to pay state taxes that had been extracted contrary to the commerce clause, and Howlett v. Rose affirmed the existence of a nearly inescapable duty in the state courts to entertain section 1983 actions. Additionally, three days after Howlett …

The Role Of The United States Senate Concerning "Self-Executing" And "Non-Self-Executing Treaties", Lori Fisler Damrosch

Faculty Scholarship

This essay concerns a pattern in treaty actions of the U.S. Senate which tends to weaken the domestic legal effect of treaties. Under this pattern, the Senate qualifies its consent to U.S. ratification of the treaty with a declaration or other condition to the effect that the treaty shall be non-self-executing, or otherwise expresses its intention that the treaty shall not be used as a direct source of law in U.S. courts. Such qualifications, referred to hereinafter as "non-self-executing declarations," give rise to important questions about the place of the affected treaties within the fabric of U.S. law, especially in …

Corporations, Markets, And Courts, Jeffrey N. Gordon

Faculty Scholarship

The times they are a changin'. Vanguard firms of the 1980s takeover boom have announced associate layoffs and salary freezes because business is down. Bankruptcy and corporate reorganization are the hot new specialties as reflected in law school class size and law firm entrepreneurialism. Acquisition activity has fallen dramatically from the halcyon days of the 1980s. The gargantuan headline-grabbing hostile bid is now rare. In particular, the "boot-strap, bust-up" highly leveraged transaction that so engaged the passions of corporate managers and raiders now seems part of the history of corporate finance rather than its future.

Many forces have played a …

Self-Defense As A Justification For Punishment, George P. Fletcher

Faculty Scholarship

There are few legal ideas as basic as the principle of legitimate self-defense. Every individual, it is said, has the right to defend his or her person, property or living space against wrongful aggression and, if necessary, to kill the aggressor. This principle is so deeply ingrained in our legal thinking that it is difficult to imagine a legal system that did not acknowledge it. The concept of having rights would be virtually toothless unless we could use force to vindicate our rights against aggression.

The notion of having rights is less well-accepted in Jewish law than are the ideas …

Toward The Feminization Of Collective Bargaining Law, Gillian L. Lester

Faculty Scholarship

Canadian collective bargaining law is flawed because it fails to address the concerns of a substantial segment of the work force and overlooks women as a rich source of insight into the dynamics of the bargaining environment. The author begins by exploring the problems inherent in the classical contractualist model, arguing that current collective bargaining law reflects these weaknesses and echoes a morality and ideology which are stereotypically masculine. By analyzing the legal and practical structures of collective bargaining, the author illustrates the ways in which the "morality of the workplace" is manifested differently between men and women. The author …

Faculty Resolution, Professor Alfred Hill, Harold L. Korn, Henry Paul Monaghan

Faculty Scholarship

Alfred Hill is everything a law professor should be. He has mastered the two areas which are most important for a law teacher's success. These are classroom performance and legal scholarship. Few of us excel in either one of these areas. The fact that Al Hill excels in both makes him truly remarkable. We of the Columbia Law School Faculty are singularly blessed to have had him in our midst for more than twenty years.

Al Hill's excellence as a teacher is best demonstrated by the enthusiastic comments of his students. He has taught many courses; his current assignments being …

Home Rule, Majority Rule, And Dillon's Rule, Richard Briffault

Faculty Scholarship

Clayton Gillette's In Partial Praise of Dillon's Rule, or, Can Public Choice Theory Justify Local Government Law? is an ambitious attempt to breathe new life into an old local government law chestnut through the analytical tools of modern political economy. Gillette asserts that because the Rule permits state judges to invalidate local legislation that results from "one-sided lobbying," Dillon's Rule increases the allocational efficiency of local decision making and reduces the deadweight losses attendant on special interest pursuit of rent-seeking ordinances. According to Gillette, Dillon's Rule checks the danger of special interest abuse of local politics by constraining local …

How The Proxy Rules Discourage Constructive Engagement: Regulatory Barriers To Electing A Minority Of Directors, Ronald J. Gilson, Lilli A. Gordon, John Pound

Faculty Scholarship

During the 1980s, both sides of the hostile takeover controversy viewed proxy contests in terms that bordered on the mythical. Those made uneasy by the takeover phenomenon, especially management, held out proxy contests as an alternative, almost utopian mechanism through which a civilized debate about corporate strategy and structure could be held. As the Delaware Supreme Court put it, "[if the stockholders are displeased with the actions of their elected representatives [in blocking a hostile takeover], the powers of corporate democracy are at their disposal to turn the board out.” In contrast, those who believed that takeovers were necessary to …

Bondholder Coercion: The Problem Of Constrained Choice In Debt Tender Offers And Recapitalizations, John C. Coffee Jr., William A. Klein

Faculty Scholarship

The past decade saw the flourishing of risky, high-yield corporate debt, often called "junk" bonds. Too many companies took on too much debt, and the chickens are now coming home to roost as these bonds have begun to default with increasing frequency.The magnitude of the problem is potentially enormous; by one estimate, $318 billion of debt has either defaulted already or trades at yields indicating the market's skepticism that it will be repaid on maturity.

Facing the prospect of default, corporate issuers are seeking to restructure or recapitalize their financial structures at a correspondingly increased pace. The market force driving …

The Regulation Of Foreign Banks In Canada: Milelli Marks A Decade Of Ambiguity, Gillian Lester

Faculty Scholarship

The recent decision of the Ontario Court of Appeal in R. v. Milelli culminates a decade of ambiguity in the laws regulating foreign banks in Canada. The case deals with the interpretation of s. 302(1)(a) of the Bank Act, which prohibits foreign banks from undertaking "any banking business" in Canada. The provisions are cryptic and contain no definition of the term "banking business". This has left foreign banks at the caprice of the statute. They are uncertain about the extent to which they are permitted either to deal with Canadian customers directly, or to participate in co-operative transactions (such as …

Introduction, George A. Bermann

Faculty Scholarship

As recent pages of this journal and and any other number of indicators would suggest, legal developments in the European Community (EC or Community) have sparked unprecedented interest on the part of the American legal profession. That this journal, five or ten years ago, would have devoted an entire issue to these developments, while not unimaginable, was unlikely. Today, however, changes in the world legal community's focus make the choice of topic seem quite obvious. The question now seems not to be whether or even when to address the Community, but rather what specific areas to address and how to …