Lawrence E. Mitchell

Death of Fiduciary Duty In Close Corporations

The internal structure of the corporation produces relationships of power and dependency. As a result, the law of corporations historically has attempted to provide a principled and coherent set of regulations to ensure that those who hold power are accountable to those who are dependent upon its fair exercise. The corporation is a human enterprise, subject to human failings, and the goal of the law has been to prevent, correct, or rectify those failings when necessary.

The Panic of 2008

The Panic of 2008 brings together scholars from a variety of disciplines to examine the causes and consequences of the global credit crisis, the subsequent collapse of the financial markets, and the following recession. The book evaluates the crisis in historical context, explores its various legal, economic, and financial dimensions, and considers various possibilities for reform. The Panic of 2008 is one of the first in-depth efforts to study the crisis as it was in the very earliest stage of resolution, and establishes a foundation for thinking about and evaluating current reform efforts and the likelihood of recurrence.

Deferred Corporate Prosecution as Corrupt Regime: The Case for Prison

This paper looks at the growing phenomenon of deferred corporate criminal prosecutions from a new perspective. The literature accepts the practice and is largely concerned with the degree to which efficient and effective criminal deterrence is achieved through pretrial diversion. I examine the practice and conclude that it presents, from a structural perspective, a case of a corrupt law enforcement regime centered in the United States Department of Justice. The regime works in effective – if unintentional – conspiracy with corporate officials to produce an inefficient enforcement regime that disregards democratic processes and threatens a loss of respect for the rule of law. I conclude that the use of individual prosecution with the possibility of prison for corporate executives is the most effective way to restore the corporate criminal regime to a functioning legal practice.

Vulnerability and Efficiency (Of What)

In this essay I address the question posed by Bill Klein that formed the basis for the symposium in which this piece appears: What are the criteria for good corporate law? I begin with the presumption that has dominated American thinking about corporations almost from the inception - corporate law should seek to promote efficiency. But there is a second dimension of equal importance that helps to legitimate this first goal. Corporate law should seek to protect those who are vulnerable to the corporation. Efficiency is almost always taken to mean efficiency to the end of wealth maximization. I question this assumption and argue that it is both an undesirable goal from the corporations perspective as well as an incoherent goal. The proper metric for efficiency is, instead, efficiency in the production of goods and the provision of services. Production of goods and the provision of services is why, after all, we permit corporations to exist. Once the undesirability and incoherence of wealth maximization and the virtues of this new metric become clear, the protection of those vulnerable to the corporation becomes easier to conceptualize and make operational. In the end, however, to be good corporate law, as to be good law generally, we must be honest both about what law is doing and what it is capable of accomplishing. I conclude that law has little if any role to play in creating rules or incentives for corporations to maximize the efficiency of their production of goods and services. The best law can do in this regard is to get out of the way. I further conclude that we have been dishonest in our assertions that corporate law protects shareholders.