Changes In Substantive Law Research Articles

Business judgment and director accountability: a study of case-law over time

ABSTRACT It is often assumed that judges are reluctant to review directors’ business judgments, which contributes to a lack of director accountability, particularly in large companies. This claim has never been systematically interrogated. This paper therefore analyses English and Welsh cases to ascertain whether judges do review and impose liability for directors’ judgments, whether this has altered from the mid-nineteenth century until the present, or varies by cause of action, and what types of company or claimant are involved. It finds that challenges to business judgment have been successful over the whole time period, with a marked increase in legal liability since 2007. This cannot be linked to changes in substantive law, but probably a greater willingness by claimants in insolvent companies to mount challenges to business judgment. Nevertheless liability levels remain low, and largely confined to private companies.

Business Judgment and Director Accountability: A Study of Case-Law Over Time

It is often assumed that judges are reluctant to review directors’ business judgments, which contributes to a lack of director accountability, particularly in large companies. Yet this claim has never been systematically interrogated. To address this, this paper analyses English and Welsh cases to ascertain the extent to which judges review and impose liability for directors’ judgments, whether this has altered from the mid-nineteenth century until the present, or varies by cause of action, and what types of company or claimant are involved. It finds that challenges to business judgment have been successful over the whole time period, with a marked increase in legal liability since 2007. This cannot be linked to changes in substantive law, but probably a greater willingness by claimants in insolvent companies to mount challenges to business judgment and by judges to impose liability. Nevertheless liability levels remain low, and largely confined to private companies.

Courts and Commerce in Colonial New York

Law is always shaped to some extent by economic factors. Contrary to the implications of some legal historians,' this was nothing new in the nineteenth century. In fact, the American legal system underwent steady change in response to economic developments well before the alleged modernization in the nineteenth century. During the seventeenth, eighteenth, and nineteenth centuries, America passed from a basically agrarian to a commercial and then to an industrial society. At the same time, the law adapted to the interests and concerns of a landed elite in the seventeenth and early eighteenth century, a commercial elite during the rest of the eighteenth century, and then an industrial elite in the nineteenth century. Because the law was responding to a changing economy and a changing elite, it should be no surprise that the law changed. This article focuses on the adaptation of the New York legal system to economic developments of the eighteenth century. The significance of legal adaptations of the eighteenth century is often not recognized by historians for two reasons. First, they are often ignored because the eighteenth century adaptations were of a different nature than the changes of the nineteenth century. Specifically, in the nineteenth century the substance of the law changed in response to economic developments while in the eighteenth century legal practice changed. Procedure and practice are not neutral, just as the substance of contract and tort law are not neutral. Different forms of legal practice support and further different economic structures and interests. Therefore, changes in legal practice are just as significant as changes in substantive law.

Civil Justice and the Judicial Role in Italy

While the Italian Parliament is considering legislative reform, the nation’s civil justice system is in crisis, due to the way trials are conducted and to the scarcity of resources. Beginning in the 1970s, fueled in part by concerns over the state of Italian justice, the old bureaucratic framework of civil justice has been challenged by changes in substantive law as well as in judicial career patterns. New rights claiming judicial attention have produced several different judicial roles. Proposals to improve the civil justice system will require a choice between the goals of due process and efficiency. The problem of choosing between these frequently incompatible goals becomes even more evident in the context of new forms of private dispute resolution.

Law and Ethics

For much of the twentieth century, courses on professional responsibility have been the stepchildren of the legal curriculum. Many law schools, especially the large national ones, either had no courses or short courses designed to consider this subject matter. Although a great number of schools did have required courses, with some notable exceptions they were not well regarded either by students or faculty. Often they were taught by faculty members with little interest in the subject matter or by outside practitioners brought in to give lectures, which turned out to be either anecdotes or recitals of rules of law, or both. Indeed, many faculty, taking the position that ethics could not be taught, conceived that a course in professional responsibility had no inherent intellectual content. Over the past fifteen years, there has been a remarkable change of view, although it has not yet completely swept the field. Great changes in substantive law have focused attention on the unmet need for legal services, on the performance of individual lawyers, and on the relationship between the profession and the achievement of social goals. Faculty and students have perceived the intellectual content and importance of issues of professional responsibility. New materials have been developed. Watergate, and especially the involvement of so many lawyers in malfeasance, provided a sense of urgency to supplement the arguments of those who urged that more attention be paid to these issues. Finally, the American Bar Association required a minimum of instruction in professional responsibility as a condition of accreditation. Some states have gone even further, requiring a course in professional responsibility for admission to the bar. At the same time, new developments in the law of professional responsibility, emanating from court decisions and government agencies, especially the Securities and Exchange Commission, have forced the profession to pay attention to these problems as a matter of self-interest. The result has been a new interest in professional responsibility throughout the profession. A number of professional conferences have been devoted solely to various substantive aspects in the field. The same attitude is apparent in the law school world. Since 1948, there have been numerous conferences devoted to the teaching of professional responsibility. The earlier debate over whether the subject matter ought to be taught in a course by itself or pervasively throughout the curriculum has died away. Most now agree that however attractive the pervasive method appears theoretically, the subject matter is not likely to be presented in a coherent and structured way unless it is taught in an independent course. Such a focused course tends also to bring relevant issues into the rest of the curriculum.

Notes on the Anti-Trust Law Policy

I. Lack of focus in discussion of policy, 73. — Limiting assumptions necessary to achieve focus, 75. — II. Political assumptions stated, indicating probable continuance of general policy, 75. — III. Relative laxity of past enforcement, 78. — Changes of emphasis in discussions of policy, 81. — Continuing importance of problems emphasized in earlier discussions, 82. — IV. Possible changes in substantive law to provide more effective enforcement, 84. — V. Present deficiencies in administration, 89. — Possible improvement of administration, 90. — VI. Methods of making exceptions to anti-trust policy, 93. — Limits upon use of consent decrees, 97. — Legislative approach to exemption of particular industries, 98. — VII. Anti-trust law policy not archaic, 100. — Does not imply government of narrow powers, 101. — Greater effectiveness possible, 101.