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E-MailThis post comes to us from J.W. Verret, a recent Harvard Law graduate and Olin Fellow in Law and Economics who has written extensively on corporate governance matters. Jay previously posted on our Blog here. This post is part of the Delaware law series, which is cosponsored by the Forum and Corporation Service Company; links to other posts in the series are available here.
Chief Justice Myron Steele of the Delaware Supreme Court recently delivered the keynote address to the American Bar Association’s Section of Business Law this year, entitled How Court Judges Talk to Lawyers: The Role of Informal Guidance in Business Law. In that talk, the Chief Justice presented a thesis that he and I have elaborated on in an article called Delaware’s Guidance: Ensuring Equity for the Modern Witenagemot, forthcoming this fall in the Virginia Law and Business Review.
Delaware’s status as the belle of the ball for corporate chartering has befuddled corporate academics for over three decades. The various theories for why and how Delaware emerged as the leader in chartering continue to spring eternal–with skepticism about Delaware’s role a popular theme.
Two commentators, Jonathan Macey and Ehud Kamar, have emphasized what they call the “indeterminacy” of Delaware’s corporate jurisprudence. They argue that vagueness in Delaware’s corporate common law functions as a litigation boon for the Delaware bar and keeps other states from plagiarizing Delaware’s General Corporation Law. Our Article takes a dim view of this notion.
The purpose of our Article is to study some of the extrajudicial activities of the Judges of the Delaware Court of Chancery and the Delaware Supreme Court have undertaken to minimize the level of uncertainty that may be systemic to the interpretation of corporation law by a court of equity. That activity comes in three unique forms:
–The Judges frequently give speeches and write articles about the direction and patterns they perceive in the line of cases from their vantage point;
–The Judges include analysis in the opinions that, though technically “dicta,” provide useful insight into how open questions not part of the ruling might be resolved; and
–The Judges frequently undertake formal policymaking roles as members of Committees of the ABA and other model rulemaking bodies.
We also highlight many of the “greatest hits” of the Judges’ work towards informal guidance, including former Chancellor Allen‘s predictions about special negotiating committees, Vice Chancellor Strine‘s view on stapled financing, and Justice Jacobs‘s service in guiding Japanese takeover jurisprudence through his scholarship. We conclude with an analysis of more than a thousand citations to just three of these Judges’ scholarship in other scholarly articles and opinions, along with examples of the many citations to “Delaware dicta” in widely-used M&A practice guides.
The full Article is available here.
