Vol. 75 No. 3 -- Summer 2020


75th Anniversary Articles

Business & Corporate

Development of Legal Opinion Practice as Reflected in The Business Lawyer

As reflected in the reports published over the years in The Business Lawyer, third-party legal opinion practice has developed significantly during The Business Lawyer’s seventy-five years. That development was prompted by a seminal article on legal opinions published in 1973 in The Business Lawyer. Since then, The Business Lawyer has published numerous reports on legal opinion practice by the ABA Business Law Section’s Legal Opinions Committee and other bar groups, as well as many articles on legal opinions. Four participants in the development of legal opinion practice describe that development in this article and predict what might be expected going forward.

Business & Corporate

Essay: The ABA’s Contribution to the Development of Business Courts in the United States

More than a quarter-century ago, the ABA Business Law Section made a commitment to the development of business courts across the United States. From the formation of its Ad Hoc Committee on Business Courts in 1994 through the engagement with state officials and business-court judges for more than two decades, the Section has become a driving force behind the adoption and refinement of the business-court concept by an overwhelming majority of the states. In this article, the innovators and champions of business courts who took up the cause on behalf of the Section tell the story of how the Section played a central role in the success of business-court initiatives and how the Section works diligently today to maintain and build upon that success.

Business & Corporate

The ABA Statement on Audit Responses: A Framework that Has Stood the Test of Time

This article summarizes key developments in the preparation of audit response letters concerning loss contingencies since the American Bar Association Statement of Policy Regarding Lawyers’ Responses to Auditors’ Requests for Information was published in 1976. These developments illustrate both the utility of the framework set forth in the ABA Statement and the responsiveness of the American Bar Association through the Business Law Section Audit Responses Committee (and predecessor committees) to issues arising under the ABA Statement and changes in accounting and auditing standards and practice.

Business & Corporate

Dodge v. Ford Motor Co. at 100: The Enduring Legacy of Corporate Law’s Most Controversial Case

This article examines Dodge v. Ford on its 100th anniversary. In Dodge v. Ford, the Michigan Supreme Court held that a business corporation is organized for the profit of its shareholders, and the directors must operate it in service to that end. Despite the fact that Dodge v. Ford is rarely cited in judicial opinions, the case continues to spark controversy in legal scholarship. There is little justification for this scholarly attention because the factual basis is little more than a caricature of Henry Ford, and subsequent developments in corporate law have all but eviscerated the precedential value of the case. Rather, the legacy of Dodge v. Ford may simply be that it serves as a convenient talisman, standing for the one sentence anyone actually cares about and rolled out with each new battle in the war between shareholder profit maximization and corporate social responsibility.


Business & Corporate

The Paradox of Delaware’s “Tools at Hand” Doctrine: An Empirical Investigation

Much has been written on the subject of abusive shareholder litigation. The last decade has witnessed at first an increase and then a dramatic spike in such suits, primarily suits filed in connection with mergers and acquisitions. Delaware courts are known for not just their deep experience in corporate lawsuits but as being doctrinal innovators. One such innovation occurred in Rales v. Blasband, 634 A.2d 927 (Del. 1993), establishing the “tools at hand” doctrine, whereby, before considering whether to grant a motion to dismiss, the court admonishes the shareholder to resort to inspection rights accorded by the Delaware General Corporation Law so as to gather facts necessary for the complaint to survive the pretrial motion.

Business & Corporate

Soft Dollars, Hard Choices: Reconciling U.S. and EU Policies on Sell-Side Research

Investors use research provided by broker-dealers, also known as sell-side research, to help formulate trading ideas and strategies. Investors normally pay for sell-side research through brokerage commissions. Recent European Union regulations require some institutional investment managers to unbundle, or pay separately for, research and trade execution. Unbundling might subject a U.S. broker-dealer to regulation under the Investment Advisers Act of 1940, significantly affecting the broker’s business practices.

Business & Corporate

The Role and Regulation of Clearing Brokers—Revisited

This article focuses on the liability of clearing brokers to introduced customers for the misconduct of their introducing firms. To delineate this liability, the article describes the distinct and separate responsibilities and functions of clearing and introducing firms in relation to transactions in introduced accounts. The article examines the key events that led Congress, in 1975, to mandate the U.S. Securities and Exchange Commission (“SEC”) to facilitate the establishment of a new and robust clearance and settlement system in the wake of the collapse of the prior, largely manual, system during the Paper Crunch crisis of the late 1960s and early 1970s as well as the resulting regulatory framework facilitated by the SEC between 1975 and 1982 that governs clearing brokers to this day.

Business & Corporate

The Role and Regulation of Clearing Brokers

Clearing brokers play a vital role behind the scenes and headlines Wall Street. It is their unheralded role to process and clear transactions originated by other securities firms that deal directly with public investors.In "carrying" the accounts of other broker-dealers, clearing firms provide their clients, the "introducing brokers," with a variety of services. These services include the maintenance of books and records; the receipt, and delivery of customer securities and funds; the extension of credit to finance customer transactions in margin accounts; and in many cases, the execution of transactions on exchanges or on the over-the-counter markets.


Business & Corporate

PEB Commentary No. 21 Use of the Term “Assignment” in Article 9 of the Uniform Commercial Code (March 11, 2020)

The Permanent Editorial Board for the Uniform Commercial Code acts under the authority of the American Law Institute and the Uniform Law Commission (also known as the National Conference of Commissioners on Uniform State Laws). In March 1987, the Permanent Editorial Board resolved to issue from time to time supplementary commentary on the Uniform Commercial Code to be known as PEB Commentary. These PEB Commentaries seek to further the underlying policies of the Uniform Commercial Code by affording guidance in interpreting and resolving issues raised by the Uniform Commercial Code and/or the Official Comments.

Business & Corporate

Comment Concerning Use of Electronic Signatures and Third-Party Opinion Letters

Parties to business transactions and their counsel seldom gather in the same location to exchange manually signed agreements and other documents; virtual closings have been and are the norm. The COVID-19 crisis has resulted in increased focus on the widespread practice of giving opinions on the execution of agreements signed electronically and delivered at virtual closings. This Comment explains the legal basis for the conclusion underlying those opinions that the electronic signatures on those agreements have the same legal effect as manual signatures.


Business & Corporate


This Annual Review (“Review”) was prepared by the Subcommittee on Annual Review of the Committee on Federal Regulation of Securities of the ABA Business Law Section. The Review covers significant developments in federal securities law and regulation during 2019. The Review is divided into three sections: regulatory actions, accounting statements, and caselaw developments.

Business & Corporate

Regulatory Developments 2019

On March 20, 2019, the U.S. Securities and Exchange Commission (the “SEC”) adopted amendments intended to modernize and simplify certain disclosure requirements of Regulation S-K and related rules and forms.1 The amendments represent the next step in a series of steps that the SEC has taken to update and modernize the disclosure requirements in Regulation S-K. For example, in August 2018, the SEC adopted disclosure update and simplification amendments that became effective in November 2018.2 We anticipate the SEC will continue to address other pending changes to Regulation S-K in the near future.

Business & Corporate

Accounting Developments 2019

In 2019, the Financial Accounting Standards Board (the “FASB”) issued twelve Accounting Standards Updates (“ASUs”) to its Accounting Standards Codification (“ASC” or the “Codification”), compared to twenty ASUs in 2018. Of the twelve 2019 ASUs, the FASB issued two ASUs that defer the effective dates of various amendments. It deferred the effective dates of three major updates, the ASUs related to the measurement of credit losses, hedging and leases,1 and of amendments to the goodwill impairment test2 and to the financial reporting requirements for long-duration contracts issued by insurance entities.