Symposium, JOBS Act: The Terrible Twos – General Solicitation & Crowdfunding, the Next Frontier of Securities Regulation

On March 24th, 2014, The Fordham Corporate Law Center and the Fordham Journal of Corporate & Financial Law will hold its 19th Annual Symposium focusing... Read More

New: International Relations Theories and International Law

This brief essay describes the main approaches to explaining international relations and how they might be useful in understanding international law.

As used in academic discourse in the United States, international relations (IR) theory is a sub-field of political science that applies the methods of modern social science to develop and test hypotheses identifying the causes of “outcomes” that occur in world — as opposed to domestic — politics. The most important outcome is war (or peace); other outcomes of interest are alliances, treaties, varying levels of international trade, and the creation or effectiveness of international institutions like the United Nations (UN) and the International Criminal Court (ICC). A useful abstraction is to characterize all international outcomes along one spectrum of cooperation and conflict, with perpetual world peace on one end and no-holds-barred world war on the other. The term “international relations” is commonly used in non-academic settings …

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POSTED IN Faculty Research

REVISION: Principal Costs

This Article offers a new theory of the optimal division of control between investors and managers in a business firm. We argue that the optimal division of control minimizes the sum of agency costs and what we call principal costs. Principal costs arise when investors exercise control in a manner that, inadvertently or intentionally, harms their collective interest in maximizing the firm’s value. Principal costs can result from conflicts of interest among investors, collective-action problems, and mistaken decisions caused by a lack of information or expertise. The desire to avoid principal costs is the reason that investors delegate control to managers. But because of the risk of agency costs, investors often retain some control, the exercise of which entails the risk of principal costs. We observe that the division of control rights between investors and mangers is a zero-sum proposition, and therefore that the tradeoff between principal costs and agency costs is inescapable. More …

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REVISION: The Artificial Collective-Action Problem in Lawsuits Against Insured Defendants

In lawsuits against defendants covered by liability insurance, the parties negotiate toward a single settlement amount that collectively binds the plaintiff and all defense-side parties (the defendant and its liability insurer). This settlement method produces a collective-action problem whenever the trial outcome is uncertain and the potential damages exceed the limit of the defendant’s liability policy. When such a suit settles, the insurer often pays more, and the defendant/policyholder pays less, than each expected to pay if the case had gone to trial. The insurer is thus biased against, and the policyholder toward, pre-trial settlement. This conflict could produce an unnecessary trial or a settlement that overcompensates the plaintiff, depending on which bias prevails. To prevent such results, courts (and some insurance policies) place settlement duties on liability insurers. But enforcing these duties entails additional litigation, compliance costs, and the risk of legal error. …

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REVISION: Principal Costs and Governance Structures in the Theory of the Firm

This Article offers a new theory of the optimal division of control between investors and managers in a business firm. We argue that the optimal division of control minimizes the sum of agency costs and what we call principal costs. Principal costs arise when investors exercise control in a manner that, inadvertently or intentionally, harms their collective interest in maximizing the firm’s value. Principal costs can result from conflicts of interest among investors, collective-action problems, and mistaken decisions caused by a lack of information or expertise. The desire to avoid principal costs is the reason that investors delegate control to managers. But because of the risk of agency costs, investors often retain some control, the exercise of which entails the risk of principal costs. We observe that the division of control rights between investors and mangers is a zero-sum proposition, and therefore that the tradeoff between principal costs and agency costs is inescapable. More …

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POSTED IN Faculty Research

REVISION: The Artificial Collective-Action Problem in Lawsuits Against Insured Defendants

In lawsuits against defendants covered by liability insurance, the parties negotiate toward a single settlement amount that collectively binds the plaintiff and all defense-side parties (the defendant and its liability insurer). This settlement method produces a collective-action problem whenever the trial outcome is uncertain and the potential damages exceed the limit of the defendant’s liability policy. When such a suit settles, the insurer often pays more, and the defendant/policyholder pays less, than each expected to pay if the case had gone to trial. The insurer is thus biased against, and the policyholder toward, pre-trial settlement. This conflict could produce an unnecessary trial or a settlement that overcompensates the plaintiff, depending on which bias prevails. To prevent such results, courts (and some insurance policies) place settlement duties on liability insurers. But enforcing these duties entails additional litigation, compliance costs, and the risk of legal error. …

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POSTED IN Faculty Research

2015 Corporate Law Symposium: The Changing Face of Corporate Compliance and Corporate Governance

On Monday, February 9th, 2015, the Corporate Law Center hosted its annual symposium. This year’s topic was the “Changing Face of Corporate Compliance and Corporate Governance.” The symposium consisted of two panel discussions, and was followed by a keynote address given by Thomas Baxter, the General Counsel and Executive Vice President of the Federal Reserve Bank of New York.

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POSTED IN Banking & Finance, Corporate Governance, Corporate Law, Fordham Corporate Law Center, Fordham Event Recap

“After Law School What? How to Leverage Your Legal Education In Non-Traditional Ways,” with Deborah L. Jacobs

On February 24th, the Fordham Corporate Law Center held a Business Law Practitioners Series Program entitled “After Law School What? How to Leverage Your Legal Education In Non-Traditional Ways,” with Deborah L. Jacobs. Ms. Jacobs is an entrepreneur, an attorney, and an award-winning journalist. Spending her educational career in New York City, she graduated from Barnard College, received her J.D. from Columbia Law School, and her M.S. from the Columbia Graduate School of Journalism. She worked as an adjunct professor at Fordham Law School for the legal research and writing course. Her last position was with Forbes as a financial journalist and senior editor. Her recent book, entitled Estate Planning Smarts – a guide for planning retirement, wills and trusts – is a best seller, and called a category killer by one review. She is currently working on the 4th edition of the book.

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POSTED IN BLPS, Fordham Corporate Law Center, Lectures Series, Uncategorized

REVISION: Contracts and Private Law in the Emerging Ecology of International Lawmaking

The creation of global markets rarely proceeds without the creation of institutions to enable and set parameters around global market actors, whether multinational companies, seafaring carriers, international banks or other private global investors. And yet little is known about the institutional matrix of lawmaking organizations on which markets depend. What is known about the proliferation of international institutions to rationalize the legal framework for global trade has prompted socio-legal scholars to question whether this accumulation of organizations creates legal fragmentation (Koskenniemi 2002), complexity (Alter; Kennedy), harmonization or subversion (Schaffer and Pollack 2010; Mallard 2014), the institutionalization of transnational legal orders (Halliday & Shaffer 2015a; Block-Lieb & Halliday 2015), or contestations among their proponents (Halliday & Shaffer 2015b).

This paper provides the long view of a complex of international lawmaking organizations that emerged …

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REVISION: Centros, the Freedom of Establishment for Companies, and the Court’s Accidental Vision for Corporate Law

In consequence of the three ECJ cases in Centros (1999), Überseering (2002), and Inspire Art (2003), EU member states can no longer effectively apply the real seat theory to companies from other Member States or take other measures to avoid the circumvention of their own laws by foreign incorporation. Founders of companies can – in principle – “pick and choose” the best legal form from all Member States, a result that many policymakers and legal scholars had sought to avoid for decades. This chapter attempts to tell a short intellectual history of the debate. In the early years of the EEC, it was thought that company law would be harmonized to such a strong degree that the free movement of corporations would no longer raise any concern. When the harmonization program stalled, Member States felt justified in maintaining protectionist measures impeding free choice of corporate law. Many saw dicta in the Daily Mail case of 1988 as providing a justification for the real seat theory, …

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