Reflections on Delaware Amendments

OK, so last night, the Delaware House passed SB 313 and sent the 2024 amendments to the DGCL to the governor for signature. Ordinarily, this would not be the kind of thing that would get much notice. Amendments to the DGCL and business entity laws get presented to the Delaware General Assembly every year by the DSBA's Corporation Law Council every year. Most of them are boring technical amendments. Occasionally, there are more substantive changes. Yesterday, a series of amendments went through the Assembly that the CLC characterized as technical; they were anything but that. 

A number of people who don't represent any clients with interests in these amendments (including me) raised substantive objections to these amendments. Proponents never really argued that these amendments were the right thing to do. They said they were technical, they said they were just bringing the statute into compliance with "market practice" and that kind of thing. But, they never really said these are amendments are the right thing to do for the law and here's is why. One line of argument they did raise and one that seemed to have purchase with legislators was that only people objecting were a bunch of pointy headed law professors who aren't even members of the Delaware bar so what do they know? 

This line of argument, I think, was probably the most pernicious line of argument that they could have rolled out.  I'm not so full of myself that I think the world revolves around me, because I certainly know that it doesn't. But, what I do know is that the value of Delaware's corporate law franchise lies in not insignificant part in the network effect associated with people outside of Delaware who are familiar with the corporate law of Delaware and look it first. It lies with all the lawyers and law professors in places outside of Delaware who have conversations about interesting things like Revlon, Unocal, § 141(a) and the like. It lies in the fact that law reviews publish articles about Delaware law and that lawyers in New York read them. It lies in the fact that generations of law students study casebooks where Delaware opinions make up the body of the jurisprudence that will become the foundation of their professional careers. 

A bunch of out of state law professors, what do they know anyway? Hmm. Since you put it that way... maybe I should just stick to teaching the corporate law of Massachusetts? Maybe add a couple of more classes about the MBCA to my syllabus? Or, maybe a case about Kane's Donuts? That's a good Massachusetts case. Or, maybe any of the Demoulas cases. 

So begins the erosion of the franchise. 

-bjmq