proRo class 2

n.b. -- "fluff" will be tested.

durkheim -- occupations like law must have a collective sense of ethics

what does it mean to call the law a profession?
- specialized training
- higher standardization of competence
- trust and reliability. because of this, the professional self-interests
     must be balanced with the client's interests (self-interests must
     be less than the client's or this level of trust doesn't work)
- self-regulatory quality to professionalism

tocqueville. 
an invisible break on democracy.
american democracy had successfully made democracy "safe for use"
     US was comparatively wealthy and no bloddy continuing warfare
shortage of guarantees against tyranny -- when a person suffers in US,
     can't turn to public opinion, legis., executive branch, police power,
     jury, even judges.... tocqueville finds problems with the iniquitous
     nature which is present in the US legal system which is the check
     against iniquity.

tocqueville writes (p. 2, 3):

"Men who have made a special study of the laws derive from this occupation certain habits of order, a taste for formalities, and a kind of instinctive regard for the regular connection of ideas, which naturally render them very hostile to the revolutionary spirit and the unreflecting passions of the multitude....

"Some of the tastes and the habits of the aristocracy may consequently be discovered in the characters of lawyers. They participate in the same instinctive love of order and formalities; and they entertain the same repugnance to the actions of the multitude, and the same secret contempt of the government of the people. I do not mean to say that the natural propensities of lawyers are sufficiently strong to sway them irresistibly; for they, like most other} men, are governed by their private interests, and especially by the interests of the moment."


disputes by judiciary: this is a naturally anti-democratic way of proceeding, no? the courts are given deference and their word is bond.

going back to footnote 4, though -- we see that this is a measure of checks and balances

biz org class 2

types of business organizations
- sole proprietorship
risky because you are liable personally beyond your investment
in the business for the torts and contracts

- General Partnership
 formed anytime 2+ people come together to share profit and control.
that's all that's needed.
the partners are personally liable for the torts and contracts of the partnership.
each partner has the full power to bind the other partners.

- Limited Partnership
has two classes of partners -- limited partners and general partners.
limited partnerships allow some investors to enjoy limited liability
     as limited partners.
must file a charter in every state in which the partnership plans to operate.
general partners manage the business and affairs of the partnership
     (and therefore it makes sense that they have the imposition of higher liability).
     partners are generally limited in selling their interests.

- LLC (end of the semester)
n.b: S-corps have been primarily usurped with LLCs
     so we're not going to discuss them much.
the formation is similar to a corp.
LLC will only exist after the sec of state files.
stakeholders are called "members"
     and each member has the right to participate in the management
     but enjoy limited liability.

- corporations (where we'll spend most of our time)
large corps (500+ investors, $1mm+ assets)
small corps (less than the above)
public corps: the issuance and creation of shares in the corp
     which are sold to the public is what makes the company "public".
the interests are held by "the public" and so the company
     must be registered under the federal securities laws
private corps: often the shareholders of a closely held corp
     are also managers, partners, board, officers, etc

remember, corps can be defined by the structure of  
     officers, investors and shareholders.
     in large corps, this is often separate. in small corps, these rules can overlap.

50% of corps are inc'd in DE, and 63% of fortune 500 inc's are DE chartered.


how to incorporate.
must fill out the charter for a corporate form.
this registration allows the company to raise capital for the business
     easily because the shareholders can be offered freedom from liability.

the difference between LLC and Corps
- IRS ruled that business that have more than two of the following
     four corp attributes it will be taxed as a corp:
     1. limited liability (basically is a given cause you filed an LLC);
     2. free transferability of interest;
     3. continuity of life (death doesn't dissolve the company);
     4. cent. management (a board of managers)

reviewing "the corporation"
"corporations are required by law to put the interests
of shareholders before everything else - even the public good"
is this true?
which of the cases deal with this point? Dodge v. Ford
as a practical matter, can a company operate this way?
why did AP Smith win and Ford lose on the dividends issue?
     will be OK so long as the benefit to the corp is made clear
     can't be a pet charity
     must be a reasonable amount
were the instructions to Ford that he couldn't issue the special dividends 
     without the regular a holding by the court that the public good 
     isn't primary?
     the construction of the plant is consistent with Wrigley and AP Smith,
     but the dividends issue isn't consistent.

the dominant view of corp is to look at them as solely money-making,
     shareholder primacy machines. another way of seeing them though
     is to think of what's in the best long-term interest of both shareholders
     and public good as it relates to it (distinction between short and long
     term profitability). charitable donations can be good public relations.
     charitable donations to a private school influences future employees
     for the company.

why do we want corps to donate to charity?
a more stable and equalized society benefits the corp

the benefits to the corp can even be very tenuous,
    and that's usually arguments of AP Smith commentators.

when is it not a good idea for corps to not donate to charity?
     when its not an interest that shareholders support.
     like this target donation.

corporate governance.
Dodge v. Ford: ford doubled wages because he needed people
     to show up to the assembly line, which was monotonous
     and difficult work. this was in the best interest of shareholders.
     this is the seminal case to shareholder dividend maximization.
     courts usually defer to the corporate officer/decision makers for
     the expertise in the business of the shares.

shlensky v. wrigley - S relied on Dodge and said that the court
shouldn't consider the public good over the good of the company. but this didn't work because - even though wrigley didn't seem to care about the impact on the team - S didn't show how the conclusion would make the cubs company more profitable! here, S should have done more to prove the point

see p. 279 and then prob 1 on p. 280