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Authors

D. Gordon Smith

Abstract

In this article, the author explains Chancellor Allen's expansive reputation by examining his ability to speak to what philosopher John Danley calls "the fundamental question": "What is the appropriate role of the modem corporation in a free society?" From the chartering of the first corporations in the United States to the present day, debate over the fundamental question has been rancorous. On one side of the debate stand those who believe that society is best served when corporations strive to maximize profits for the benefit of shareholders; on the other side stand those who believe that corporations should have some more explicit public purpose. Chancellor Allen's approach to the fundamental question - and his most important legacy to corporate law - was to embrace traditional corporate norms, not to create new norms, during an era of great upheaval and innovation in business practices. The following sections analyze Allen's decisions involving Revlon duties and reveal his role in shaping those duties. Part one briefly describes the major cases decided by the Delaware Supreme Court defining the contours of "Revlon duties." Part two describes Chancellor Allen's Revlon jurisprudence. Finally, Part three concludes with the author's view of Chancellor Allen's legacy to corporate law. He argues that Chancellor Allen successfully defended the traditional allocation of power over corporate decisionmaking among directors, shareholders, and courts by artfully and insistently rebuffing attempts of the Delaware Supreme Court to expand the role of the courts into areas where they have no useful role. In so doing, Chancellor Allen helped to ensure that the appropriate role of the modern corporation in a free society would be decided by individual actors in that society rather than by judicial fiat.