Lawyers as Trusted Agents in Nineteenth Century American Commerce: The Influence of Fiduciary Norms and Equity on Economic Development

43 Pages Posted: 17 Feb 2017 Last revised: 23 Jul 2019

See all articles by Michael Halberstam

Michael Halberstam

The Chandra Law Firm

Justin Simard

Michigan State University - College of Law

Multiple version iconThere are 2 versions of this paper

Date Written: June 12, 2019

Abstract

The role of fiduciary law in the development of North American capitalism has been overlooked by institutional economists, who interpret fiduciary law as a form of contract and make the judicial enforcement of contract central to the transaction-cost theory of economic development. This article argues that the emergence of distinctive, equity-based fiduciary laws and norms significantly influenced the development and growth of early nineteenth-century American markets. Our historical research identifies lawyers as important economic actors, who served as catalysts for the emergence of this governance culture. Lawyers adopted fiduciary principles that allowed them to become trusted intermediaries, thereby addressing the agency-cost problems inherent in complex economic exchange that vex the institutionalists’ contractual account of economic development. 

Keywords: fiduciary law, agency, legal profession, law and development, institutional economics, legal history

JEL Classification: A12, B15, B50, D02, D80

Suggested Citation

Halberstam, Michael and Simard, Justin, Lawyers as Trusted Agents in Nineteenth Century American Commerce: The Influence of Fiduciary Norms and Equity on Economic Development (June 12, 2019). Law and Social Inquiry, Forthcoming, Columbia Law and Economics Working Paper, Available at SSRN: https://ssrn.com/abstract=2919359 or http://dx.doi.org/10.2139/ssrn.2919359

Michael Halberstam (Contact Author)

The Chandra Law Firm ( email )

1265 West 6th Street, Ste 400
The Chandra Law Building
Cleveland, OH 44113
United States
646-285-6281 (Phone)

HOME PAGE: http://www.chandralaw.com

Justin Simard

Michigan State University - College of Law ( email )

318 Law College Building
East Lansing, MI 48824-1300
United States

HOME PAGE: http://www.jlsimard.com

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