Corporate Law

Online
Essay
AI & the Business Judgment Rule: Heightened Information Duty
Geneviève Helleringer
Professor Geneviève Helleringer, ESSEC Business School-Paris & Oxford University, and research member of ECGI. She is Visiting Professor of Law at Columbia Law School and Paris-Panthéon-Assas University. Her research focuses on comparative Commercial and Corporate Law.

We would like to thank the participants of the How AI Will Change the Law Symposium, cohosted by the Coase-Sandor Institute, the University of Chicago Law Review Online, and Oxford Business Law Blog, for their helpful comments.

Florian Möslein
Florian Möslein is the Director of the Institute for Law and Regulation of Digitalisation and Professor of Law at the Philipps-University Marburg, where he teaches Contract Law, Corporate Law and Securities Regulation.

We would like to thank the participants of the How AI Will Change the Law Symposium, cohosted by the Coase-Sandor Institute, the University of Chicago Law Review Online, and Oxford Business Law Blog, for their helpful comments.

Artificial intelligence (AI) has the potential to alter the interpretation of the duties of care, skill, and diligence. As these duties form the foundation for the BJR and equivalent provisions, the development of AI is also expected to impact the BJR. There is a broadening importance, in an increasingly data-driven business environment, of the requirement to gather sufficient information before making a decision and to use information in a valid manner. Changes are both quantitative (how much information to collect) and qualitative (which types of information to collect). The changes also relate to the methods of decision-making, including the role of measures and statistics over intuition.

Business Organizations Corporate Governance Corporations
Online
Essay
A Story of Two Holy Grails: How Artificial Intelligence Will Change the Design and Use of Corporate Insolvency Law
Felix Steffek
Felix Steffek is Professor of Law at the University of Cambridge. He serves as Director of the Centre for Corporate and Commercial Law (3CL) and holds a JM Keynes Fellowship in Financial Economics. He is Global Distinguished Professor of Law at the University of Notre Dame, SGRI Visiting Professor at Singapore Management University, and Senior Member of Newnham College.

The author is grateful for the very helpful comments received at the conference on ‘How AI Will Change the Law’ organized by the University of Chicago Coase-Sandor Institute for Law and Economics, the University of Chicago Law Review, and the Oxford Business Law Blog, in particular from Tony Casey who contributed a formal comment.

This Essay explores the two holy grails of AI and the law: predicting court decisions and predicting contracts. While there is some overlap between the two, because in order to draft contracts one needs to know the law, both issues can be functionally distinguished. These two areas, and their importance in the context of increasing AI development, are explored more deeply within the context of corporate insolvency law.

Contracts Corporations
Online
Essay
Game Over: Facing the AI Negotiator
Horst Eidenmüller
Statutory Professor for Commercial Law at the University of Oxford and Professorial Fellow of St. Hugh’s College, Oxford.

This Essay is based on my contribution to the University of Chicago Law School symposium on “How AI Will Change the Law” (April 12–13, 2024). I should like to thank the conference participants for their feedback. I am particularly grateful to Omri Ben-Shahar, Genevieve Helleringer, and Klaus Schmidt for detailed comments and suggestions.

AI applications will put an end to negotiation processes as we know them. The typical back-and-forth communication and haggling in a state of information insecurity could soon be a thing of the past. AI applications will increase the information level of the parties and drastically reduce transaction costs. A quick and predictable agreement in the middle of a visible bargaining range could become the new normal. But, sophisticated negotiators will shift this bargaining range to their advantage. They will automate negotiation moves and execute value-claiming strategies with precision, exploiting remaining information asymmetries to their advantage. Negotiations will no longer be open-ended communication processes. They will become machine-driven chess endgames. Large businesses will have the upper hand in these endgames.

Arbitration Corporations Machine Learning
Online
Essay
Aggregating Values: Mutual Funds and the Problem of ESG
Adriana Z. Robertson
Adriana Z. Robertson is the Donald N. Pritzker Professor of Business Law at the University of Chicago Law School.
Sarath Sanga
Sarath Sanga is a Professor of Law at the Northwestern University Pritzker School of Law and the William Nelson Cromwell Visiting Professor of Law at Harvard Law School.

We thank Jill Fisch, Kate Judge, Elizabeth Pollman, Christina Skinner, David Weisbach, and the University of Chicago Law Review Online team for valuable suggestions and discussions. This Essay benefited from comments by workshop participants at the 1st Annual Women in Law & Finance Conference. Talla Khelghati provided exceptional research assistance. All errors are our own.

What does it mean for a fund to deliver ESG results to its investors?

ESG Investing
Online
Essay
Courts Prepare to Take On the True Lender Question
Rhemé Sloan
Rhemé Sloan is a J.D. Candidate at the University of Chicago Law School, Class of 2023.

They thank Annie Kors, Matthew Makowski, Renic Sloan, and the University of Chicago Law Review Online team.

Financial technology (“fintech”) firms and banking institutions have thoroughly cemented lending in the digital realm.

Fintech
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Article
v88.6
Federal Corporate Law and the Business of Banking
Lev Menand
Lecturer in Law and Academic Fellow, Columbia Law School.

We thank Dan Awrey, Lucian Bebchuk, Ryan Bubb, Jeff Gordon, David Grewal, Bob Hockett, Howell Jackson, Rob Jackson, Lina Khan, Joshua Macey, Gillian Metzger, Saule Omarova, Ganesh Sitaraman, Joe Sommer, Mike Townsley, Art Wilmarth, and the participants in the 22nd Annual Law & Business Conference at Vanderbilt Law School, the Wharton Financial Regulation Workshop, the Columbia Law School Blue Sky Workshop, and the 11th Labex ReFi-NYU-SAFE/LawFin Law & Banking/Finance Conference for their helpful comments and insights.

Morgan Ricks
Professor of Law and Enterprise Scholar, Vanderbilt University Law School.

It is a bedrock (though still controversial) principle of U.S. business law that corporate formation and governance are the province of state, not federal, law.

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Article
v88.4
Deal Protection Devices
Albert H. Choi
Professor of Law, University of Michigan Law School

I would like to thank workshop participants at the law schools of Columbia University, University of Michigan, and University of Southern California; conference participants at the 2018 Trans-Pacific Business Law Conference and the 2020 Winter Deals Conference; and particularly Dhruv Aggarwal, Adam Badawi, Elisabeth de Fontenay, Joel Friedlander, Jeff Gordon, Michael Knoll, Vice Chancellor Travis Laster, Brian Quinn, and Bob Scott for many helpful comments and suggestions. Comments are welcome to alchoi@umich.edu.

On April 12, 2018, two wholesale office supply companies, Genuine Parts Corporation (GPC) and Essendant, Inc., agreed to combine their office supply businesses in order to better compete against e-commerce sellers, such as Amazon.com, Inc.

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Article
87.8
The Myth of Creditor Sabotage
Vincent S.J. Buccola
Assistant Professor, The Wharton School of the University of Pennsylvania.

This Article was substantially written while Mah and Zhang were undergraduates, and it reflects neither the opinions of nor nonpublic information about their employers. The authors thank Ken Ayotte, Allison Buccola, Saul Levmore, Josh Macey, Adriana Robertson, Mike Simkovic, David Skeel, Matt Turk, and participants at a Wharton faculty workshop for criticism of defunct drafts.

Jameson K. Mah
Investment Analyst, Cyrus Capital Partners. BS (Economics), The Wharton School of the University of Pennsylvania.
Tai Zhang
Analyst. BS (Economics), The Wharton School of the University of Pennsylvania.

A basic assumption in the standard paradigm of corporate finance is that a company’s investors want the company to succeed. To be sure, investors of different classes—stockholders and bondholders, for example—bear risk and reward unequally.

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Article
87.5
A Mission Statement for Mutual Funds in Shareholder Litigation
Sean J. Griffith
T.J. Maloney Chair and Professor of Law, Fordham Law School.
Dorothy S. Lund
Assistant Professor of Law, University of Southern California, Gould School of Law.

Thanks to Alon Brav, William Birdthistle, Erik Gerding, Dan Klerman, RobertRasmussen, Michael Simkovic, Leo Strine Jr, and David Webber for thoughtful comments and input. This draft has benefited from comments received at the Boston University Law Review Symposium, the Corporate and Securities Litigation Workshop, the National Business Law Scholars Conference, the Southern California Business Law Workshop, and from workshops at Harvard Law School, the University of Minnesota Law School, the University of Southern California Gould School of Law, and Vanderbilt Law School. We are also grateful for conversations with plaintiffs’ attorneys and mutual fund representatives who wish to remain anonymous. Finally, thanks to Taylor Apodaca, Benjamin Bloodstein, Matthew Schob, Kevin Sette, and Dmytro Usyk for superlative research assistance. The viewpoints and any errors expressed herein are the authors’ alone.

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Article
84.3
Dead Hand Proxy Puts and Shareholder Value
Sean J. Griffith
T.J. Maloney Chair in Business Law and Professor of Law, Fordham Law School

We are grateful for comments we received at the 2016 Annual Meeting of the American Law and Economics Association, the Eleventh Annual Conference on Empirical Legal Studies, and at presentations at Florida State University College of Law, Fordham Law School, Notre Dame Law School, St. John’s University School of Law, UCLA School of Law, USC Gould School of Law, and Young Conaway Stargatt & Taylor, LLP. Thanks also to Jennifer Arlen, Alon Brav, Jack Coffee, Elisabeth de Fontenay, Chris Foulds, Joe Grundfest, Victoria Ivashina, J. Travis Laster, Katie McCormick, Darius Palia, Frank Partnoy, Richard Squire, Leo Strine, and Eric Talley for comments and conversations on earlier drafts. The viewpoints and any errors herein are the authors’ alone.

Natalia Reisel
Assistant Professor of Finance and Business Economics, Gabelli School of Business, Fordham University
Hedge fund activism is now a defining force in corporate governance.
Business Organizations Corporate Governance Empirical Analysis

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