2002 • Volume 27 • Number 2

The Inescapably Empirical Foundation of the Common Law of Corporations

Leo E. Strine, Jr. 

Common law adjudication has always involved the formulation of legal standards by judges based on assumptions about how the world works. In this essay, which was delivered as the keynote address for the Second Annual Law and Business Program Conference at Vanderbilt University Law School, the author focuses on the importance of empirical facts in the evolution of the common law of corporations. Using doctrinal examples drawn from recent cases, the essay demonstrates that many important standards in corporate law rest on factual intuitions that are not case-specific, but which instead involve more general understandings about how human beings behave in various market and institutional settings. As a result, the author argues that it is more, rather than less, important for corporate law judges to seek to acquire knowledge about real-world behavior, to expose their reasoning openly, and to be willing to change course if experience and evolutions in the commercial world suggest that modifications in prior doctrine are warranted.