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

Case Western Reserve University School of Law

Justin Simard

Willamette University - College of Law; Northwestern University; American Bar Foundation

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)

Case Western Reserve University School of Law ( email )

11075 East Boulevard
Cleveland, OH 44106-7148
United States
646-285-6281 (Phone)

Justin Simard

Willamette University - College of Law ( email )

245 Winter St. SE
Salem, OR 97301
United States

Northwestern University ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

American Bar Foundation ( email )

750 N. Lake Shore Drive
Chicago, IL 60611
United States

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