In this second Conglomerate interview with a distinguished Delaware jurist, I am honored to welcome Supreme Court Justice Jack Jacobs to talk with us today. For our last interview with Chief Justice Steele, see here. Also, for more on how Delaware judges interact with the bar and the public, see my article with Chief Justice Steele here.
If you've taken or practice corporate law, you may recognize Justice Jacobs' many opinions from his service on the Court of Chancery and the Supreme Court. To offer a few examples, he was the author of the recent AFSCME opinion on election bylaw legality and the Supreme Court's Disney opinion. He was also one of the first judges to invalidate a poison pill in the Quickturn and Toll Brothers cases when he served as a Vice Chancellor.
He has spoken and been published in forums around the world, including Tokyo, Hong Kong, and Stockholm. The conventional wisdom among the Delaware bar is that his opinions are some of the deepest works of intellectual rigor in the corporate jurisprudence.
Verret: Welcome to the Conglomerate, Justice Jacobs.
Justice Jacobs: Thanks for the invitation. It's a pleasure to be here.
Verret: What did you do before you became a Judge?
Justice Jacobs: From 1968-1985 I was in private practice at Young, Conaway, Stargatt & Taylor in Wilmington, Delaware, where I specialized in corporate, securities, and commercial litigation.
Verret: When did you first become interested in corporate law?
Justice Jacobs: Ironically, that subject bored me to death when I was a law student. At that time I vividly recall promising myself that I would have nothing to do with that area of the law. That attitude abruptly changed when, after graduating from law school, I became a law clerk for the Delaware Court of Chancery (and also Delaware’s Superior Court). That role afforded me the rare opportunity to see corporate cases actually tried, which brought otherwise dry appellate opinions to life. I found them fascinating on both a human, and an intellectual, level. Moreover, these cases were usually presented and tried by exceptional lawyers from major city law firms. For these reasons I soon decided that litigating corporate cases was the area in which I wanted to specialize.
Verret: What made you decide to serve on the bench?
Justice Jacobs: My clerkship in the Delaware courts also enabled me to observe first hand what dedicated, excellent judges do, and afforded me the privilege to get to know many of them personally. It was that experience which formed my ambition to be (someday) a Delaware judge, if ever I were so fortunate as to be offered that opportunity.
Verret: How many former law clerks do you have?
Justice Jacobs: Because I have been a judge for almost 24 years, I have 23 former law clerks.
Verret: You first joined the bench in 1985, which seems to have been a watershed period for takeover law in Delaware. It must have been an exciting time to be on the Court of Chancery?
Justice Jacobs: It was a very exciting time, for many reasons. First, the takeover cases were at the very cutting edge of Delaware corporate law. Although we could not know it at the time, they ultimately transformed Delaware corporate jurisprudence and made merger and acquisitions law a new and important sub-specialty. It was very heady to be at the center of many of these widely publicized cases. Second, those cases presented unique intellectual challenges, not only because each new takeover dispute pushed the envelope of corporate law doctrine out one more notch, but also because it forced the judges to do their best to reconcile the rulings in each new case consistently with the doctrine developed up to that point. That was more easily said than done, and in many cases the process took years to complete. This new doctrine was a moving target that was being developed at warp speed, rather than at the tortoise’s pace which characterized corporate doctrinal development during decades before. Third, and relatedly, these cases forced the judiciary to examine several of the basic premises and underpinnings of corporate law.
Our need to shape this law into a fabric that was coherent led the Court of Chancery judges to become a very collegial group. Although each trial judge is free to decide a case as he or she deems appropriate, unencumbered by the views of colleagues, nonetheless, we found it institutionally useful and beneficial to attempt to puzzle out collectively (where possible) the difficult issues that we confronted individually, in circumstances where the decision of one judge in any particular takeover case could bind other judges in future cases. This practice also helped to avoid inconsistent adjudications and to strengthen that court as an institution.
Verret: What is so unique about Delaware's approach to corporate law?
Justice Jacobs: That is a subject to which corporate law academics have devoted much time and law review space. In my opinion, the quality that is most unique is its effort to reconcile, in each specific case, the requirements of law (specifically, transactional predictability and giving practical guidance to corporate fiduciaries) with the commands of equity (to arrive at results that are fair and make sense in the business world). That is often more easily said than done, but over time I believe we have been successful in doing that.
Verret: How has the Delaware bar changed since you first started practice?
Justice Jacobs: When I became a Delaware lawyer, only about 500 lawyers were “enrolled” (admitted to practice) in Delaware, a state whose population was only about 700,000. That period was the high water mark of professional opportunities for lawyers. Also, the smallness of our Delaware bar enabled it to maintain somewhat effortlessly a high standard of professionalism based on informal constraints. In that legal world everyone knew everyone else, and if any lawyer cut corners, the word got out fast. The result was a culture where social, rather than formal controls, created strong incentives for lawyers to treat each other courteously and professionally. In addition, the small size of our bar made it easier for lawyers in both large and small firms to be mentored by more experienced lawyers, thus easing the transition from law school graduate to competent practitioner.
The situation is now different. Today, over 4000 lawyers are enrolled in the Delaware Bar--an 800 percent increase for a statewide population that has increased only about 25% during that same period. Those demographics are typical of what has occurred in other states—an overproduction of lawyers in relation to the opportunities for law-related jobs. That demographic has also changed the “face to face” quality that characterized the Delaware Bar four decades ago. One unavoidable result has been to weaken somewhat the social control-based legal culture possible only in a small size bar. To be sure, Delaware still remains a more personal, less anonymous place to practice than many major metropolitan centers. The increase in lawyer population has not reduced the quality or professionalism of those segments of the Delaware Bar that practice corporate, bankruptcy intellectual property, and many other specialty areas. But, it has made professional life more difficult for practitioners in solo or small firm practice who do not have the mentoring opportunities that were available to lawyers of the preceding generations. The organized bar, both in Delaware and elsewhere, needs to develop creative ways to address this problem.
Verret: I understand you are working on a comparative work examining international governance issues, tell us more about that.
Justice Jacobs: Last year I had the privilege of participating in a comparative mergers and acquisitions academic symposium in Tokyo, Japan, to which I was invited by Columbia Law Professor Curtis A. Milhaupt. Curtis and I found that we shared a common interest in trying to predict the future course of M&A regulation in Japan. That subject is new and relatively uncharted, because Japan has experienced hostile corporate takeovers only since 2000, and not until 2005 did Japan attempt to develop, in a systematic way, an institutional and substantive law framework to address this issue. That common interest has led us to collaborate on an article that would trace and compare the M&A regulatory institutional development in the United States and Japan, with a view to developing a framework that would enable scholars to predict the future course of Japanese legal regulation in this area. It soon became apparent that any such study would have to include the UK City Code as well, since the Japanese system has elements of both the City Code and the Delaware approaches. As a result, we were able to persuade Professor John Armour of Oxford University to join in our project, which is now only in its beginning stages.
Verret: I understand you teach courses at NYU, Columbia, and Widener. Do you find your experience as a jurist useful in the classroom?
Justice Jacobs: Yes, I do find it useful, since my personal experience of having presided over several of the takeover and other complex corporate litigations, adds a somewhat unique perspective. That perspective enables me to communicate the meaning of the case materials on a “war story,” as well as a legal doctrinal level. That gives my students a reason to listen to what I am trying to say with real (as opposed to sometimes feigned) interest. Incidentally, I also find my experience as a teacher useful to my role as a judge, because it is a constant reminder of the burden of lawyers whose stock in trade is communicating their client’s position to judges. That requires them to give the judge reasons to give special attention to their presentation. A judge who takes on the role of a law professor now finds himself in the same position as the lawyers who appear before him—the judge-teacher must give his students a reason to listen to him, since, quite frankly, the students could care less that their teacher’s day job is judging. All the students care about is whether what is coming out of their teacher’s mouth is worthy of their attention. It’s a humbling experience.
Verret: Which of your opinions, either from serving on the Court of Chancery or the Supreme Court, do you think would be most useful in the classroom?
Justice Jacobs: There is no single right answer to that question, because the answer depends on the nature of the course being taught. For example, in a basic corporations class, appellate opinions may often be of more use, because the emphasis is more on doctrine than strategy or procedure, and appellate opinions are often clearer distillations of pure doctrine. On the other hand, where the course emphasizes procedure, litigation tactics and strategy, the trial court opinions are often more useful (or at least as useful) as the appellate opinions, since those dimensions of the litigation are often more apparent from the trial court opinion. I have taught both types of courses. This past semester, I taught (together with Professor John Coffee) a seminar at Columbia Law School that focused on litigation tactics and strategy in so-called “major” corporate litigation (not limited to pure corporate law, but including related areas, including bankruptcy and antitrust). In that course, the reading materials consisted more of trial court, than appellate court, opinions.
Verret: Your recent AFSCME v. CA opinion has been in the news recently. How was the Court able to turn the opinion around so quickly?
Justice Jacobs: In that case, there was a need for expedition because there was a fixed date for the shareholders meeting to take place, which created a short-fuse deadline for the preparation and mailing of proxy materials. The form and content of the proxy materials would depend on how the issues in AFSCME v. CA were decided. In cases where an expedited decision is required, it has long been the practice and the professional culture of both the Delaware Court of Chancery and the Supreme Court to respond quickly, by moving the expedited case to “the front of the line.” That is what happened here. And although I happened to be the judge who authored the AFSCME opinion for our court, the opinion it was a collaborative effort by all five Justices, who gave it the same high priority. That is what made it possible to expedite the matter as rapidly as we did.
Verret: How do you see Delaware's role as a source of corporate law evolving into the 21st century?
Justice Jacobs: In normal circumstances I would be better able to offer an informed opinion on this subject. In today’s political environment, however, legislation is being proposed that, if it became law, could federalize several different aspects of what has traditionally been the subject of state corporation law. Without knowing whether this will happen, and specifically what areas (if any) would be affected, any opinion that I proffered would be pure speculation.
Verret: Thanks so much for taking time out of your busy docket to join us today Your Honor, we sincerely appreciate it.
Justice Jacobs: It was my pleasure.
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