Professor Bainbridge...on law, politics, religion, culture & food

Future Directions for Corporate Law Scholarship

Dave Hoffman has a very thoughtful and provocative post on possible future directions for corporate law scholarship. I guess I’m a doctrinalist in his schema, reflecting my bias that corporate law scholarship ought to be targeted at Delaware judges and SEC Commissioners rather than one’s fellow academics. I’d argue, however, that that bias is not irrational. It’s not clear to me why law professors ought to be “quant-heads” or modellers. What’s our comparative advantage in those areas relative to financial economists, business school profs, and the like who are actually trained in those methodologies and paid to use them?

My take on corporate law scholarship is reflected in the introduction to my M&A treatise, where I wrote that:

I have tried to produce a readable text, with a style that I hope is simple, direct, and reader-friendly. Even when dealing with complicated economic or financial issues, I tried to make them readily accessible to legal audiences. At the same time, however, I have not shied away from bringing theory to bear on doctrine. While the text has a strong emphasis on the doctrinal issues taught in today’s M&A classes, it also places significant emphasis on providing an economic analysis of the major issues in that course. The text thus offers not only with an overview of the black letter law, but also a unifying method of thinking about the subject.

I hasten to reassure the potentially worried reader that this text is designed for lawyers and law students—not graduate finance or economics students. Economic analysis is done solely qualitatively—no mathematical models or formal game theory—and kept as intuitive as possible. Even more important, economic analysis is never done for its own sake. In his well-known critique of modern legal scholarship, Judge Harry Edwards remarked: “Theory wholly divorced from cases has been of no use to me in practice.” My practice experience confirms that criticism, at least as long as we put strong emphasis on the phrase “wholly divorced.” Theory brought to bear on specific legal issues often can be quite illuminating, as I hope to illustrate in this text. Economic analysis nevertheless is brought into play gradually and only in instances where it adds significant value.

I still stand with Edwards, “at least as long as we put strong emphasis on the phrase ‘wholly divorced.’”