Author: Harwell Wells

“Saying “No” Is Not Client Betrayal

“Betrayed.”   Acting Attorney General Sally Yates said “no” to President Trump and refused to order the Department of Justice to defend the immigration/refugee ban.  This was decried as an act that “betrayed” the Trump administration, stood as “a further demonstration of how politicized our legal system has become[,]” and an instance of “people refusing to enforce our laws….” These attacks on this career prosecutor misunderstand a lawyer’s fundamental duty and the specific role the Attorney General plays. Lawyers say “no” to clients all the time.  We tell clients that a particular claim or defense can’t be raised or that an argument won’t be presented.  Our duty is to the client within limits set by law.  There is no principle that says a lawyer must (or may) do whatever the client wishes and defend any position no matter how unconstitutional or unlawful. Indeed, the Rules of Professional Conduct sometimes require us to tell the client “no.” We cannot lie or present false evidence to a court, and we are also forbidden from following a superior’s orders …

The Life (and Death?) of Corporate Waste

At first glance, corporate law’s waste doctrine makes little sense. The classic definition of waste—a transaction “for consideration so disproportionately small as to lie beyond the range at which any reasonable person might be willing to trade,” an act equivalent to “gift” or “spoliation” of corporate assets—suggests that waste should never arise, for what corporation would ever enter into a transaction so absurd, absent self-dealing or gross negligence? Yet waste claims are regularly made. The conventional wisdom is that waste claims never succeed; but empirical studies show that’s wrong, and some of the most significant corporate law cases of the last two decades have dealt with waste. Respected judges have called for the doctrine’s abolition, referring to it as a “vestige” and memorably deriding it as the mythical “Loch Ness Monster” of corporate law; still, waste survives. It is a remnant of ultra vires, a doctrine proclaimed dead for over a hundred years—but waste is not dead. It confounds our model of managerial responsibility; after decades in which discussion of directors’ and officers’ duties have …

Business people overlooking city

A Long View of Shareholder Power: From the Antebellum Corporation to the Twenty-first Century

For most of the twentieth century, the conventional wisdom held— probably correctly—that shareholders in America’s large, public corporations were passive and powerless and that managers wielded the real power. Beginning in the 1980s, however, shareholders in the form of institutional investors started to push for a greater say in corporate decision-making. In the twenty-first century, hedge funds have upped the ante, fighting for major changes in corporations whose shares they own. Once-imperial CEOs have now become embattled as they fight, but often lose, against activist shareholders demanding policy changes, new dividends, board representation, and even the sale or break-up of corporations. In short, things have changed. This Article situates the present-day rise of shareholder power by taking a long view of the previous two centuries, moving beyond traditional accounts to reach all the way back to the beginnings of the American business corporation in the early nineteenth century, then following the story of shareholder power up to the present day. Its long view reveals the complicated and shifting nature of shareholder power, documenting how periods …