Law Matters. Lawyers Matter.

My paper begins from the general premise -- reflected in powerful and dramatic ways in the events that followed on the tragedy of September 11 th -- that corporate managers do, in fact, struggle "to do the right thing". By this I simply mean that those folks who are entrusted with managing the company's business affairs generally do struggle to make the right decision, to make decisions that are in the best interests of the corporation, which includes consideration of all the constituencies represented by the body corporate. The purpose of my paper is to show that the rule of law matters in this decisionmaking process, particularly the law of fiduciary duty, because it provides support for these managers as they engage in this ongoing, daily process. Once I establish that law matters, then I will 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 decisionmaking process of corporate managers than just their technical knowledge of the relevant legal rules. To demonstrate the truth of this assertion - that Law Matters - my paper will focus 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 prevailed in the late 1990's. 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. More specifically, the lessons to be learned from the story of spinning illustrate how vigorous judicial enforcement of fiduciary duty standards reinforces the role of social norms in establishing the standards of fair and ethical conduct that we can expect of modern corporate managers. These concerns are at the very heart of the corporate social responsibility theme that forms the basis for much of Progressive Corporate Law scholarship. By using the practice of spinning to illustrate how social norms influence the conduct of corporate managers, and further, how fiduciary duty law influences the development of these social norms, the story of spinning reinforces the continuing importance of vigorous judicial development of mandatory rules of fiduciary duty in the context of corporate law. In so doing, my analysis of the practice of spinning will also serve to illustrate why the modern approach of the law and economics paradigm - although providing very valuable analytical tools - does not provide a complete framework for analyzing problems that arise in the modern corporate environment. In telling the story of spinning, I will also 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. So, in the end, my paper concludes that the essential moral of the story of spinning is: Law Matters. . . . and Lawyers Matter. Period.