Article by Therese H. Maynard
This Article begins from the general premise-reflected in powerful and dramatic ways in the events that followed on the tragedy of September 11th-that corporate managers do, in fact, struggle “to do the right thing.” The thesis of this Article is that the rule of law matters in this decision-making process, particularly the law of fiduciary duty, because it provides support for these managers as they engage in this ongoing, daily process. After establishing that law matters, I argue that this conclusion must, in turn, inform us as to the proper role for lawyers in advising their corporate clients. In other words, lawyers matter; that is lawyers do, in fact, add more to the decision-making process of corporate managers than just their technical knowledge of the relevant legal rules.
To demonstrate the truth of this assertion-that law matters-this Article focuses on a real world problem that has received significant attention lately in the financial press: the Wall Street practice known as “spinning.” Spinning refers to the practice reportedly used by Wall Street investment banking firms to allocate IPO shares in the hot equity/new issues market that briefly prevailed in the late 1990s. My analysis of the culpability of those corporate managers who participated in such spinning activity clearly reflects the fundamental principle that fiduciary duty law matters .
In telling this story of spinning, I underscore the continuing importance of the role of the “damn good business lawyer” in advising corporate managers, thereby demonstrating that the legal profession continues to have significant responsibilities that go well beyond that of a glorified scrivener. The Article concludes that the essential moral of the story of spinning is: Law Matters. Lawyers Matter. Period.
About the Author
Therese H. Maynard. Professor of Law, Loyola Law School, Los Angeles, California.
Citation
76 Tul. L. Rev. 1501 (2002)