Professor Eric Talley, Professor of Law at UC Berkeley, has asked that I provide information about a survey he is conducting to help law schools better tailor their training of business lawyers. (The good professor presented the 24th Annual Pileggi Lecture in Delaware.)
Professor Bainbridge has the details about the survey on his blog already so I direct you to that site for the particulars.
Prof. Hillary A. Sale presented the 22nd Annual F.G. Pileggi Distinguished Lecture in Law earlier this morning in Wilmington, Delaware, to members of the Delaware judiciary, the Delaware bar and members of academia. She provided insightful commentary on the decision by former Chancellor Allen in the case of In Re Caremark International, Inc. Derivative Litigation, 698 A.2d 959 (Del.Ch. 1996). For a short summary of her presentation see here and here. Her presentation will be the basis for a law review article in The Delaware Journal of Corporate Law. Her insights on the role of the board to provide oversight and monitoring is especially noteworthy in light of recent corporate scandals, including most recently, backdating of options. Updated summary here.
I want to thank Prof. Bainbridge for linking my blog to his blog. As an aside, he will give the Pileggi Lecture for the upcoming 2005 Annual Francis G. Pileggi Distinguished Lecture in Law, hosted by Widener University School of Law. The Lecture is named after my father and brings a nationally prominent corporate law expert to speak to the Delaware Bench and Bar, after which a law review article is usually published in the Delaware Journal of Corporate Law, based on the Lecture.
This post was prepared by Frank Reynolds, who has been following Delaware corporate law, and writing about it for various legal publications, for over 30 years.
Corporate lawyers have a unique opportunity to influence American companies to benefit by practicing the ethical standards their mission statements and codes of conduct espouse, a Villanova Law School professor told a gathering of Delaware’s bench and bar recently.
After a two-year pandemic pause, jurists and attorneys returned to the Hotel DuPont in Wilmington for the 36th Annual Francis G. Pileggi Distinguished Lecture in Law to hear “Business Ethics: What Everyone Needs to Know,’ presented by J.S. Nelson, an Associate Professor at the Harvard Business School and an Associate Professor at Villanova Law School.
Compared to the statutes and rules that corporate lawyers deal with, ethics is rather esoteric
Ethics–essentially, man’s instinct to do the right thing–is not a theoretical subject, but is rather the foundation for the formulation, interpretation, application and enforcement of laws, Nelson said. “Ethics is nothing like what you think it is.”
Ethics are just a matter of subscribing to a set of principles
It’s more complicated than that because humans have a dual nature regarding ethics, she pointed out. On one hand, they proudly endorse certain values and behaviors and believe they are ethical, but on the other, they are very susceptible to pressure from certain institutions and situations to compromise or suspend even fervently held values and principles—often with famously disastrous results.
The people who said they were “just following orders” during the Holocaust were unique
Nelson told the group that extensive behavioral studies have repeatedly produced the exact opposite conclusion: regardless of ethnic, cultural or religious background more than two thirds of test subjects will yield to consistent unified pressure to join with an institution or group’s program –when the program directly contradicts the subject’s core ethical principles.
She said this dynamic applies in the corporate world when employees confront a corporate culture that tolerates or even promotes lax quality control, poor safety or working conditions, gender inequality or sexual harassment or questionable financial practices. They will often do what they must to get along in the world in which they find themselves.
Ethical management does not produce a better bottom line.
Actually, in the long run, a management that provides good working conditions with equal pay, benefits and opportunities and prioritizes quality and safety over short-term operating cost savings will attract and retain more engaged, efficient staff, enjoy greater profits, and “won’t have to worry about where the next scandal will be coming from,” Nelson predicted.
But to have that positive proactive effect, the institution must present a consistent unified position against even small ethical wrongs, because it’s all too easy for a company’s effect on ethics to reverse and snowball in the negative direction, she said.
The Boeing example
For example, Nelson said, the Boeing Company had a stellar safety record until its management and board decided to create a higher passenger capacity version of its workhorse 737 jetliner without a complete redesign. Instead, they opted to essentially hang bigger engines on its wings to lift the greater weight and when that caused a tippy fore/aft balance problem, they devised a computer program to help pilots compensate, but the program had deadly flaws that allegedly caused two crashes with the loss of all aboard, she explained.
That triggered an FAA investigation that grounded the entire 737 MAX fleet for 20 months and a successful shareholder suit in the Delaware Chancery Court that claimed Boeing’s directors were liable for lax safety that caused large financial losses. In Re the Boeing Company Derivative Litigation, No. 2019-0907-MTZ opinion issued, (Del. Ch. Sept. 9, 2021).
As this blog has reported, ethical failure allegations played a key role in Vice Chancellor Morgan Zurn’s Sept 9, 2021 landmark ruling which found plaintiffs’ derivative director oversight claims met the tough pleading standards of the Delaware Supreme Court’s Marchand ruling with well-supported allegations that a majority of the directors are likely liable for Boeing’s billions of dollars in losses and penalties. Marchand v. Barnhill, 212 A.3d 805 (Del. 2019).
Importantly, Vice Chancellor Zurn’s ruling repeatedly pointed to the Marchand standards in finding that Boeing’s directors:
But Nelson pointed out that rulings on alleged low points in corporate behavior often prompt positive changes in ethical standards, “and sometimes today’s ethics become tomorrow’s laws.”
The current issue of the Delaware Journal of Corporate Law features an article by Professors James D. Cox and Randall S. Thomas entitled: Delaware’s Retreat: Exploring Developing Fissures and Tectonic Shifts in Delaware Corporate Law, 42 Del. J. Corp. L. 323 (2018). The authors carefully review recent Delaware court decisions that have reduced the role of judicial review in contests for corporate control in deference to decisions of independent directors and appropriate shareholder approval. Those involved in Delaware corporate litigation need to add this to their “must reading” list. The article was presented in connection with the 33rd Annual F.G. Pileggi Distinguished Lecture in Law at the Widener University Delaware Law School.
Ben W. Heineman Jr., the former General Counsel for General Electric Co. and now a Senior Fellow at Harvard Law School, presented the 32nd Annual F.G. Pileggi Distinguished Lecture in Law earlier this week, and as Frank Reynolds of Thomson Reuters writes, he talked about a book he recently published in which he argues that the role of a corporation’s in-house counsel should be independent enough to allow the general counsel in particular to serve as both a partner to management and a guardian for shareholders. In sum, in-house counsel must be prepared to quit, or be fired, which could mean forfeiting millions of dollars in stock options, in order to maintain the independence that is necessary to perform the role correctly.
Frank Reynolds of Thomson Reuters has written an article that provides a detailed synopsis of the presentation last 
week by Professor Jeffrey Gordon of Columbia Law School in which the good professor discusses the triumph of Delaware’s board-centered model in connection with activist investors. The speech was presented as the 31st Annual Francis G. Pileggi Distinguished Lecture in Law. Details about the Lecture and its history are included in Frank Reynolds’ article and also available on these pages. We highlighted a recent Chancery decision that discussed the board-centered approach to Delaware corporate law. Professor Gordon is shown in the photo. Supplement: The esteemed Professor Stephen Bainbridge, who a number of years ago presented this Annual Lecture, provides commentary on Professor’s Gordon topic.
Guhan Subramanian is the Joseph Flom Professor of Law and Business at the Harvard Law School. He prepared a post on the Harvard Law School Corporate Governance Forum based on his lecture delivered at the 29th Annual Francis G. Pileggi Distinguished Lecture in Law in Wilmington, Delaware. The beginning of his post is excerpted below:
In November 2013, I delivered the 29th Annual Francis G. Pileggi Distinguished Lecture in Law in Wilmington, Delaware. My lecture, entitled “Delaware’s Choice,” presented four uncontested facts from my prior research: (1) in the 1980s, federal courts established the principle that Section 203 must give bidders a “meaningful opportunity for success” in order to withstand scrutiny under the Supremacy Clause of the U.S. Constitution; (2) federal courts upheld Section 203 at the time, based on empirical evidence from 1985-1988 purporting to show that Section 203 did in fact give bidders a meaningful opportunity for success; (3) between 1990 and 2010, not a single bidder was able to achieve the 85% threshold required by Section 203, thereby calling into question whether Section 203 has in fact given bidders a meaningful opportunity for success; and (4) perhaps most damning, the original evidence that the courts relied upon to conclude that Section 203 gave bidders a meaningful opportunity for success was seriously flawed—so flawed, in fact, that even this original evidence supports the opposite conclusion: that Section 203 did not give bidders a meaningful opportunity for success.
I concluded my lecture with three questions for the audience:
- (1) Is the constitutionality of Section 203 settled law?
- (2) If not, would a bidder be well-advised to challenge the constitutionality of Section 203 the next time it becomes a binding constraint in a takeover situation?
- (3) And if yes, what, if anything, should Delaware do to avoid this challenge?
I, along with numerous prominent academics and practitioners, believe the answer to the first question is no. Professor Joe Grundfest of Stanford Law School told the Wall Street Journal: “Lawyers now have the data they need to renew a constitutional battle over these sorts of state takeover laws.” Professor Steve Bainbridge of UCLA Law School wrote on his popular blog: “I agree that the article’s data calls into question the empirical grounding of the Delaware trilogy. To that extent, I agree that the validity of the Delaware statute could be challenged.”
The Delaware Journal of Corporate Law recently announced their hosting of the 27th Annual Francis G. Pileggi Distinguished Lecture in Law with the above topic by Professor Jill E. Fisch. This lecture series, held in Wilmington, Delaware, is presented to the Delaware Bench and Bar and focuses on developing issues in the area of corporate law. The lecturer is always a leading voice in the field of corporation law, and the lecture provides the Delaware Bar, particularly the members of the bench on both the Court of Chancery and the Supreme Court, an opportunity to challenge academia with practical concerns. The notice is available here. Registration information is available here. The post on the law school’s website about the lecture is available here.
Highlights of last year’s lecture by Professor Joseph Grundfest on forum selection clauses for intra-corporate disputes, was highlighted here.
The 27th Annual Francis G. Pileggi Distinguished Lecture in Law
Friday, September 23, 2011
Registration Form
Jill E. Fisch
Perry Golkin Professor of Law
Co-Director, Institute for Law and Economics
University of Pennsylvania Law School
“Leave it to Delaware: Why Congress Should Stay out of Corporate Governance”
8:00 a.m. Hotel duPont, Wilmington, Delaware
11:00 a.m. Widener University School of Law
Professor Jill E. Fisch is a nationally known scholar, whose work focuses on the intersection of business and law, including the role of regulation and litigation in addressing limitations in the disciplinary power of the capital markets. Her 1997 paper, Retroactivity and Legal Change: An Equilibrium Approach (Harvard Law Review),
introduced a new framework for retroactivity analysis that could apply to both adjudication and legislation. Her 2003 paper (with Stephen Choi), How to Fix Wall Street: A Voucher Financing Proposal for Securities Intermediaries (Yale Law Journal), proposed a voucher financing mechanism to increase accountability for securities intermediaries such as research analysts, proxy advisors and credit rating agencies.