Prof. David Kershaw – The Path of Corporate Fiduciary Law

Contemporary accounts of corporate legal evolution view lawmakers as highly responsive to the economic interests of both pressure groups and markets. Through this lens law is understood to be the product of pressures exerted by managers, investors, institutional shareholders and the Federal Government, and the incentives of state lawmakers to accommodate the interests of these pressure groups. This view dominates the current understanding of corporate legal evolution in the United States and is becoming highly influential in comparative accounts of corporate legal variation.

This lecture sounds a note of objection: it argues that the disciplinary pendulum has swung too far toward external accounts of legal evolution and too far away from internal accounts of legal change, which view the path of law, at least in part, as the product of the internally generated constraints of the legal system. Contrary to the dominant account of the evolution of self-dealing law in the United States, the contemporary self-dealing rule is not the unexplained product of external market pressures but is the logical product of the path of fiduciary law trodden through the corporate conception. The lecture shows that for contemporary corporate law a significant dose of inevitability was administered at the inception of general incorporation.