June 2023, Institute of Advanced Legal Studies

Victoria Barnes, Marc Moore and Sally Wheeler

Background

In the eighteenth and early nineteenth century, firms in Britain were small, localised and individuals who engaged with them were bound together by kinship ties.[1] Disputes were often dealt with internally by the regional business community without recourse to law.[2] Over the course of the nineteenth century, with laissez faire economic policy, liberal political ideas and the advent of limited liability legislation, various merger movements ensued.[3] These firms grew far beyond the small and medium sized enterprises that they once were. The tie between the community and the business was severed as many operated in London head offices, far away from their owners and customer bases.[4] Some firms, which became multi-nationals and looked outwards to trade, soon became larger and richer than the countries in which they operated.[5] The unfettered growth of large-scale corporations brought about changes in structure of socio-economic relations, the development of managerial hierarchies, the separation between ownership and control, an increasingly impersonal relationship between employer and worker, and substantial inequalities in wealth and power.

This workshop explores the development of company regulation by examining the role that theorists played in it. In doing so, it adds to the burgeoning research on the lives and impact of theorists, scholars, academics and litigants.[6] There is a general tendency to overlook this group, certainly in legal scholarship.[7] This is owing to the primacy of legal sources and the emphasis placed upon using good legal authorities, such as legislation and case law.[8] Judges, as the authors of leading judgments, therefore, naturally take centre stage in this body of research.[9] Even within this idea of judicial primacy what matters, particularly in the UK context, is the dicta from individual judgments. The idea that a judicial figure can through a series of judgments and extra-judicial comments craft and shape a branch of law has been largely missing from twentieth and twenty-first century jurisprudence.

Despite the focus on cases, theorists, scholars and entrepreneurs played a central role in creating and establishing regulatory ideas.[10] Academics educated future generations of business leaders, policy-makers and lawyers. They instilled ideas that made their way into the letter of the law or managerial practice, often by writing texts.[11] Managerial guidebooks gave rise to a set of norms that were shared among a community of entrepreneurs and leaders. Legal texts functioned in the same way, but acted to set standards for political elites and practising lawyers. Textbooks in company and partnership law often gave fuller or more persuasive account of the law, thereby challenging it and in some instances, changing it.[12] With the ‘better dead, when read’ rule and the notion that scholarly literature did not give rise to law itself,[13] the influence of academic texts was obscured often deliberately in the law-making process. Theorists, writers and academics have had influence on law-making throughout history, but this has hitherto been much less visible than it should be.

Aims

The aim of this workshop is threefold. It enables us first to rediscover forgotten and neglected authors. One might look to Alfred F. Topham and John Parkinson as good examples, along with a number of others. Topham contributed to several leading textbooks of the early twentieth century and his treatise Topham’s Company Law (1904) went through many editions, before it was abandoned in 1978. The impact of Parkinson’s groundbreaking book Corporate Power and Responsibility: Issues in the Theory of Company Law (1995) was short-lived, no doubt in part due to his sudden passing in 2004. Second, it encourages us to think about the biographical element of an author’s work and to put theoretical work in its social, economic and historical context. Context was key in terms of shaping those ideas and then in turn understanding how they were received by others. In other words, investigating the lives of the leading thinkers helps us to explain both short and long term shifts in the structure of business regulation. Finally, a discussion of the theorists in company law allows further insight into the distinctiveness of Company Law in the United Kingdom as opposed to the Anglo-American or European model. With the growth of the Law and Economics movement in the United States, the right of centre shift in American political thought has also been dominant in several theoretical discourses. There are – and were – other ways of viewing company law.[14]

Wide general appeal

Even with these aims, it is often difficult to discern what or who exactly is an inspirational theorist and overlooked scholar in company law. There are many who qualify for such an accolade. Noted economic theorists and company lawyers up until 1970 or so would have all been male. A list of them would be dominated almost exclusively by Oxbridge/London, Chicago or Harvard elites. This workshop does not intend to recreate systems of past inequity for the sake of accuracy and strict adherence to history. The theorists will thus be selected with the aim of showcasing a diverse and mixed group of individuals with an even spread and a wide variety of legal themes that would be relevant to an audience today. It is both ‘bottom up’ and ‘top down’ in its view. It incorporates the voices of

• individual investors,
• corporate executives, businessmen and financiers,
• those in industry, such as the authors of modern portfolio theory that influenced investor behaviour,
• politicians, economists and other influential individuals who drove economic policy and/or authored legislation around these topics,
• academic thinkers and educationalists in pre-university settings and the modern day law and business schools,
• judges, barristers and others associated with the formal regulatory process.

Sources used to write accounts of theorists, such might include:

• diaries, correspondence, appointment books, and other private ephemera,
• archival records of policy decisions at the committee, government or firm level,
• oral history and interviews,
• academic and scholarly texts, potentially including draft manuscripts of key texts,
• records from education eg student notebooks, course notes, theses or exams,
• quantitative data and other measures that show scholarly impact, influence or reception.

In this guise, this proposal adds to multiple bodies of scholarship. It provides an important addition to the ongoing research into legal education and the legal profession as well as company and commercial law, law and economics, legal theory, legal history, and international and comparative law. It is interdisciplinary in approach with its direct engagement with the literature and methods used in law, sociology, economics, business and management, and history.

Relevance of WG Hart to this workshop

WG Hart wrote his doctoral thesis at the University of London on the law of trusts; it was awarded in 1905. There are several references to companies in Hart’s doctorate and it is close to some of the substance proposed here,[15] but Hart did not see himself as working on company law itself. This is unsurprising, if one thinks of the context. Commercial law would also have been better known at this point as mercantile law; it was not a subject for doctrinal lawyers, such as Hart, trained in law alone. It was also a topic for merchants and businessmen, too.[16] What we might understand as company law today would then have been thought of largely as trusts law. The courts of equity and common law were joined together in the late nineteenth century and the fusion between equity and common law had only just begun, when Hart wrote at the onset of the twentieth century.[17] Company law would have, therefore, have been closely related to equity and trusts and also partnership law. As partnerships are no longer the most popular organisational form,[18] this area of law is not as interesting as it was previously. When Hart wrote on equity and trusts, company law as a field of law did not quite exist.[19] It was not an independent area of study. Hart’s ideas, method and approach were a product of their time.[20] Shedding light on the context and the shifts in legal thought and scholarship are an important part of the proposed workshop. This is a discussion that we aim to facilitate in the workshop.

London as a natural location for this workshop

London is both institutionally and culturally of significance for those working in the field of company law around the world. Early charted companies acted from the metropole holding a position close to the seat of government. In the United Kingdom, these early examples of international firms were often headed from London. In various waves of colonialisation, English company law was exported to ensure that investors could function across the British Empire without having to face the uncertainty of unknown or different legal rules. Indeed, by the turn of the nineteenth century, London was the financial capital of the world. Entrepreneurs based here looked outwards and formed multinational enterprises (MNEs). Judges in the Judicial Committee of the Privy Council heard cases from around the common law world; their aim was often to bring the common law together to encourage certainty and trade. They borrowed ideas and also acted to shape the letter of the law beyond the borders of their own jurisdictions. Several cases and rules moved into other jurisdictions with the help of this court; others were rejected in the wake of the decline of the British Empire and the prevailing winds of change. Companies too altered their public persona in these decades to overcome the liability of foreignness and some even divested. With the creation of the European Union in the late twentieth century, politicians and entrepreneurs looked to engage with this trading block. Those in company law were not only responding to domestic economic issues, but also to ensure Britain’s competitiveness and to stave off relative economic decline. In Thatcher’s Britain, the favoured explanation for decline was the gentlemanly nature of British culture. This charge that has been dismissed as being a stereotype that is overly London-centric.

The city of London is innately relevant to this project and so are its people. With entrepreneurs, politicians, barristers and judges often either hailing from or establishing a life in the City, there is a natural pull to this location. This is not all. There are strong connections with this project and the University of London, too. LCB Gower was educated at University College, London and spent the first part of his academic career there until he moved to the London School of Economics as Professor of Commercial Law from 1948 to 1952.[21] The first edition of his famed textbook, The Principles of Modern Company Law, was published shortly afterwards in 1954. He, much like William Twining, spent the following years in law faculties in the United States and in Lagos, Nigeria, before returning to the United Kingdom.[22] He died in London in 1997.[23] Bill Wedderburn, later Lord Wedderburn of Charlton, edited the third edition of Gower’s textbook, together with Gower. Wedderburn was a Professor of Commercial Law at the London School of Economics from the 1960s to the early 1990s.[24] Wedderburn wrote on company law, shareholder rights and labour law.[25] Access to their publications in libraries of the University of London will be informative to those researching the lives of company law theorists.  Others who were the Cassel Professor of Commercial Law, such as Lord Chorley, deposited their personal papers with the London School of Economics Archives. The Institute for Advanced Legal Studies’ Library also holds many rare copies of lectures and conference proceedings.[26]

Contact

For more info contact: info@globalcorporatelaw.com

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[1] Lucy Newton, ‘Regional Bank–Industry Relations during the Mid-Nineteenth Century: Links between Bankers and Manufacturing in Sheffield, c.1850 to c.1885’ (1996) 38 Business History 64.

[2] Francesca Carnevali, ‘“Crooks, Thieves, and Receivers”: Transaction Costs in Nineteenth-Century Industrial Birmingham’ (2004) 57 The Economic History Review 533.

[3] Forrest Capie and Ghila Rodrik-Bali, ‘Concentration in British Banking 1870–1920’ (1982) 24 Business History 280.

[4] Janette Rutterford, Dimitris P Sotiropoulos and Carry Van Lieshout, ‘Individual Investors and Local Bias in the UK, 1870–1935’ (2017) 4 The Economic History Review 1291-1320.

[5] Joseph E Stiglitz, ‘Regulating Multinational Corporations: Towards Principles of Cross-Border Legal Framework in a Globalized World Balancing Rights with Responsibilities Conference – The Ninth Annual Grotius Lecture Series’ (2007) 23 American University International Law Review 451.

[6] See, for instance, the special issue of the Journal of Law and Society on legal biography in 2015, the special issue of Journal of Legal History in 2020, the many volumes of Cambridge University Press series Great Christian Jurist,and the Hart series Scholars in…

[7] Bartie comments on the lack of ‘meta-scholarship’ (scholarship on scholarship) in law. Susan Bartie, Free Hands and Minds: Pioneering Australian Legal Scholars (Bloomsbury Publishing 2019). Waddams, in his work on legal treatises, used the jurist database to show that judicial references to the works of Lindley and other judges increased in frequency after those authors had been appointed to the bench. Stephen Waddams, ‘The Authority of Treatises in English Law (1800-1936)’ in Mark Godfrey (ed), Law and Authority in British Legal History, 1200-1900 (Cambridge University Press 2016) 283.

[8] In company law, the Companies Act 2006 and landmark cases, such as Salomon v A Salomon & Co Ltd [1896] UKHL 1, [1897] AC 22 or Foss v Harbottle (1843) 2 Hare 461, 67 ER 189, are central.

[9] Sugarman believed that ‘[d]espite the variety of producers and consumers of legal discourse, it is what the judges say and the supposed need of the legal profession as narrowly defined that have had the greatest magnetic pull over the nature and form of legal education and scholarship’. David Sugarman, ‘Legal Theory, the Common Law Mind and the Making of the Textbook Tradition’ in William Twining (ed), Legal Theory and Common Law (Basil Blackwell) 27.

[10] Law books were not generally considered to be legal authorities in themselves. Roscoe Pound, ‘Law in Books and Law in Action’ (1910) 44 American Law Review 12; Angela Fernandez and Markus D Dubber (eds), Law Books in Action: Essays on the Anglo-American Legal Treatise (Bloomsbury Publishing 2012).

[11] For more on the rise of the legal treatise and the difference between it and a textbook, see A Simpson, ‘The Rise and Fall of the Legal Treatise: Legal Principles and the Forms of Legal Literature’ (1981) 48 University of Chicago Law Review.

[12] Waddams (n 7) 283.

[13] Alexandra Braun, ‘Burying the Living? The Citation of Legal Writings in English Courts’ (2010) 58 The American Journal of Comparative Law 27.

[14] See, for instance, Cheffins’ rebuttal for those who see American economic theorists as the source of shareholder primacy. Brian R Cheffins, ‘Stop Blaming Milton Friedman!’ (Social Science Research Network 2020) SSRN Scholarly Paper ID 3552950 <https://papers.ssrn.com/abstract=3552950> accessed 17 February 2022.

[15] Walter Gray Hart, A Thesis upon the Definition, Classification, Creation And Interpretation of Trusts in English Law (Priv print 1903) 22, 33, 34, 56, 91, 99, 105, 111.P22, 33, 34, 56, 91, 99, 105, 111

[16] For more on this, see Ross Cranston, Making Commercial Law through Practice 1830–1970 (Cambridge University Press 2021).

[17] Patrick Polden, ‘Mingling the Waters: Personalities, Politics and the Making of the Supreme Court of Judicature’ (2002) 61 The Cambridge Law Journal 575.

[18] Firms were slow to take up limited liability in the decades after limited liability legislation. The tipping point is often thought to be the failure of the unlimited liability firm, the City of Glasgow Bank. Several shareholders became destitute and bankrupt following its failure. This was well publicised and firms moved towards the limited liability corporate form afterwards. For more on the failure its economic and cultural impact, see Graeme G Acheson and John D Turner, ‘The Death Blow to Unlimited Liability in Victorian Britain: The City of Glasgow Failure’ (2008) 45 Explorations in Economic History 235; Thomas A Lee, ‘“A Helpless Class of Shareholder”: Newspapers and the City of Glasgow Bank Failure’ (2012) 22 Accounting History Review 143.

[19] For some today, company law is a discipline in itself, with its own approaches and methods.

[20] Although some still maintain this traditional position, it is outmoded and reasonably unfashionable to think of company law, only in a black letter fashion as a branch of trust law.

[21] S. M. Cretney, ‘Gower, Laurence Cecil Bartlett [Jim] (1913–1997), jurist.’ Oxford Dictionary of National Biography.  24. Oxford University Press. Date of access 18 Feb. 2022, <https://www.oxforddnb.com/view/10.1093/ref:odnb/9780198614128.001.0001/odnb-9780198614128-e-69130>

[22] David Sugarman, ‘William Twining: The Man Who Radicalised the Middle Ground’ (2020) 16 International Journal of Law in Context 475.

[23] Cretney (n 21) ‘Gower’ Oxford Dictionary of National Biography.

[24] Despite his association with the City, particularly Charlton in south east London, his personal papers can be found at the Modern Record Centre at the University of Warwick.

[25] KW Wedderburn, ‘Shareholders’ Rights and the Rule in Foss v. Harbottle’ (1957) 15 The Cambridge Law Journal 194; Kenneth William Wedderburn, The Worker and the Law (2nd ed, Penguin 1971).

[26] Several rare copies of Wedderburn’s lectures or conference proceedings appear in pamphlet form in at the Institute for Advanced Legal Study. See WT Murphy and Kenneth William Wedderburn (eds), Labour Law and the Community: Perspectives for the 1980’s (Institute of Advanced Legal Studies, University of London 1982); Kenneth William Wedderburn, The Social Charter, European Company and Employment Rights: An Outline Agenda (Institute of Employment Rights 1990); Kenneth William Wedderburn, The Future of Company Law: Corporate Governance, Fat Cats and Workers (Clyde & Co 2004).