Business Associations

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The title of this post is the title of a panel discussion I organized for the 2019 Business Law Prof Blog symposium, held back in September of last year.  (Readers may recall that I posted on this session back at the time, under the same title.)  The panel experience was indescribably satisfying for me.  It represented one of those moments in life where one just feels so lucky . . . .

Why?  Because it fulfilled a dream, of sorts, that I have had for quite a while.  Here’s the story.

About ten years ago, I ended up in a conversation with two of my beloved Tennessee Law colleagues while we were grabbing afternoon beverages.  One of these colleagues is a tax geek; the other is a property guy.  Somehow, we got into a discussion about mergers and acquisitions.  I was asked how I would define a merger as a matter of corporate law, and part of my answer (that mergers are magic) got these two folks all riled up (in a professional, academic, nerdy way).  The conversation included some passionate exchanges.  It was an exhilerating experience.

I have remembered that exchange for all of these years, vowing to myself…

Recently, I listened to the NPR Hidden Brain’s podcast titled “Playing Favorites: When Kindness Toward Some Means Callousness Toward Others.”

This podcast hit on topics that I have been thinking about a good bit lately—namely selfishness, giving, poverty, family, favoritism, and a culture of “us against them.” This post only has the slightest connection to business, so I will include the rest of the post under the break.

Friend of the blog Bernard Sharfman has a new post up on the Oxford Business Law Blog, responding to Martin Lipton’s recent “On the Purpose of the Corporation” posts.  Bernie’s full post can be found here, and I’ve excerpted some portions (slightly out of  order) below.  I appreciate that the post highlights that a big part of the shareholder v. stakeholder debate is about whose rights are determined by contract v. fiduciary duties.

[T]he Lipton, Savitt, and Cain definition of corporate purpose is missing both an objective and a strategy on how it will create social value….

I am disappointed with this definition, a definition that ignores the social value created by for-profit businesses, namely the goods and services they produce; ignores that this social value is being produced for the financial benefit of its shareholders; and uses the pretense that uninformed institutional investors are partners in the management of a company….

[T]hey make no mention of the social value created by the corporation through the successful management of its stakeholder relationships, the goods and services it provides. How can a definition of corporate purpose not mention this? It’s as if a corporation should be ashamed of why it…

Yesterday, I posted the AALS Section on Business Associations Call for Papers for the New Voices in Business Law program.  Today, I am posting the section’s general call for papers, which focuses on a very salient topic: Corporate Boards in the Age of COVID-19.  There certainly is a lot that we can say about that from the advisory, compliance, and litigation (prevention and management) angles.

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Call for Papers for the
Section on Business Associations Program on
Corporate Boards in the Age of COVID-19

2021 AALS Annual Meeting

The AALS Section on Business Associations is pleased to announce a Call for Papers for its program at the 2021 AALS Annual Meeting in San Francisco, California. The topic is Corporate Boards in the Age of COVID-19. Up to three presenters will be selected for the section’s program.

The COVID-19 pandemic has put corporate boards under tremendous stress. In the midst of unprecedented financial and operational challenges, boards must comply with legal obligations that are often complex, uncertain, and contested. This panel will explore the impact of COVID-19 on the corporate board. How should boards exercise their oversight and disclosure responsibilities during these times? Should boards reevaluate the corporate purpose, especially considering the…

Strava

The Social Enterprise Alliance (SEA) previously defined “social enterprise” as businesses that (1) Directly address social need; (2) Commercial activity [not donations] drives revenue; and (3) Common good is the primary purpose. SEA’s definition has evolved to be more inclusive, now recognizing three different models based on — (1) opportunity employment, (2) transformative products/services, or (3) donations. While the first definition could be criticized for being too narrow (Ben & Jerry’s would not qualify because their product does not directly address a “social need”), SEA’s new definition is likely too broad because it seems to cover all donating businesses. 

Personally, I am most fond of social enterprises that produce products/services that lead directly to human flourishing. 

For Lent, I gave up Facebook/Twitter/Instagram. While these products have their uses, on the whole they tend distract me from what is truly important. Perhaps social media has improved since the advent of Covid-19, and I admit to feeling somewhat out of the loop. But I also feel much more at peace, and may not return to those forms of social media after Easter, or, if I do, I hope it will be on a much more limited basis. 

In contrast, Strava…

CNN recently ran a story entitled – the pandemic risks bringing out the worst in humanity.

Rather than focus on the negative, I decided to collect some of the positive business responses to COVID-19. This is probably just a small sampling of the positive responses. I may update this list from time to time; please feel free to add more in the comments or email me. [Updated with some suggestions from my business ethics students and to include some of the highlights from this excellent, more extensive list that a reader e-mailed.]

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As a new dean in a new city, I have had the opportunity to meet hundreds of impressive lawyers in Omaha.  I have been incredibly impressed by the sophisticated practices at the very law firms I have visited. For “midsized” firms, there are lawyers doing incredible work here that is the same work being done on the coasts, including some amazing M & A work. 

But here in Omaha, just like every city around the country, law firms have “corporate” practices.  But really, those are business law practices or transactional practices.  Almost every corporation of significant size also owns some LLCs (limited liability companies) and perhaps other entities. And certainly these firms, especially those working with real estate companies, will work with LLCs and other pass through entities.  

So, consistent with my prior posts on this subject, I urge lawyers and firms to acknowledge the full scope of what we do.  It’s not just corporate.  It’s so much more. And that’s a good thing. I just ask that we embrace business practice or transactional practice to try to include all we do.   

Each time I teach Advanced Business Associations, I try to engage students on the first day in an exercise that leverages their existing knowledge of business associations law but also introduces new angles and nomenclature.  I assign a reading (this year, on shareholder wealth maximization) and ask each student to write up a brief definition of the concepts of “policy” and “theory” as they may apply to and operate in business associations law. I then ask them to relate their definitions to the reading.

So, the core question before the house in that course on the first day of classes last week effectively was the following: is shareholder wealth maximization legal doctrine, policy, theory, or something else?  We had a wide-ranging discussion on the question, working off three propositions I put on the board.  The class session enabled me to review some concepts from the foundational Business Associations course while also discussing the role of theory and policy in law and lawyering, getting some creative mental juices flowing, and teaching a bit of the new vocabulary they will need for the course.

I decided that it could be beneficial to share with my students the views of others on our effective…

Business Associations is a tough course to teach, whether it is taught in a three-credit-hour or four-credit-hour format.  I have written before (here, here, and here) about the challenges of teaching fiduciary duties in this course.  And I recently posted here and here about the characterization of a classic oversight conundrum as a matter of corporate fiduciary duty law in Delaware.

I just recently finished grading my Business Associations exams from last semester.  They were a good lot overall, but they evidenced several somewhat common errors that seemed to beg for broad dissemination to the class. So, I sent them all a message inviting them to come in and review their exams and highlighting certain things for their attention of a more general nature.  

Today, I offer you that general counsel that I gave to my Business Associations students based on that review of their written final exams.  It is set forth below, absent my introductory and closing remarks.  As you’ll see, some of it relates to substantive law, and some of it relates to exam or other skills.  Perhaps this is of use to those of you who just taught or are about to…