It's Time for a Good Hard Look in the Mirror: The Corporate Law Example

Abstract:     
This article asserts that the move from the industrial age to the information age represents a fundamental change to our society on such a widespread basis that the legal order must reexamine the premises about how our society functions that are the foundational elements for U.S. Common Law to assess whether those premises remain valid. The article briefly examines the continuing validity of certain foundational premises in contract and intellectual property law to illustrate that such premises are no longer supported by the realities of modern society. With fundamental change confronting multiple areas of law in the information age, this is shown to be a problem worthy of widespread inquiry by legal scholars in various fields. The article then turns to a detailed analysis of the continuing validity of the premises supporting shareholder primacy in corporate law, looking at the historic justifications for allocating ownership, control and duties to demonstrate that these premises are no longer true. Based on the current relative needs of the business and contributions by various constituencies, the article asserts employees should have certain duties owed to them as well. The article concludes with a novel model for such a stake in the form of a springing right to profit sharing.

Number of Pages in PDF File: 37

Keywords: shareholder primacy, worker rights, law & economics, legal reform

Accepted Paper Series