The Disinterested Person: An Alternative Approach to Shareholder Derivative Litigation

Abstract

With the increased use of alternative dispute resolution techniques in corporate and securities law,' we have reached the point Justice Frankfurter addressed in SEC v. Chenery Corp.,2 where we might inquire: But to say that an alternative dispute resolution technique is appropriate only begins the analysis; it gives direction to further inquiry, which alternative dispute resolution technique is appropriate? How should it be structured? I urge that we would do well to study Continental civil in particular its concept of an investigative judge, for suggestions of how to refine our existing alternative dispute resolution procedures in shareholder derivative litigation. Professor Langbein, for example, in an enthusiastic description of the former German method of civil procedure (German model), has emphasized the advantages of judicial fact gathering in streamlining discovery, selection of expert witnesses, and encouragement of settlements. Langbein suggests that the German model is preferable to [o]ur lawyer-dominated system of civil procedure, which he characterizes as often . . . criticized both for its incentives to distort evidence and for the