Book reviews

Directors' Decisions and the Law: Promoting Success

Alice Belcher

PUBLISHER: ROUTLEDGE

ISBN: 978-0415671934 (hardback); 978-0203714379 (e-book)

PRICE: $140

The Companies Act 2006 codified directors’ duties for the first time, and the subtitle of this new book by Professor Alice Belcher of the University of Dundee is taken from one of the codified duties: “to promote the success of the company for the benefit of its members as a whole”. The book is about directors – individually and collectively – and decision-making within their organisations.

Interestingly, the author’s examination of director decision-making goes beyond the confines of the private sector to consider decision-making in public sector organisations also. This is not something one might expect from the book’s title, but does mean the reader benefits from the author’s examination of decision-making in the public sector.

The book is in three parts. Part I – Contexts – explores the settings for directors’ decision-making in the private sector, the public sector, and organisations in (or close to) financial distress.

Part II – Themes – approaches directors’ decisions via a set of themes. This part includes an examination of the concept of trust and the ways in which legal principles applied to directors are founded on trust, demand trust, permit trust or demand a degree of distrust. It is clear that the word “trust” is being used more often now in the context of the board, whether in the private or public sector, and the author concludes that if trust is an important element in the functioning of boards, it is important to have laws and governance provisions in which the consequences for trust and trust requirements are “properly thought through”. Other themes in part II are risk and uncertainty, corporate culture and climate, and communication and credibility.

Part III – Levels – is structured around levels of decision-making and responsibility. The individual responsibilities of a director, together with the collective responsibility of the board, are examined. In particular, there is an interesting discussion around the topic of collective responsibility, in which the author identifies a gap in enforcement mechanisms, concluding that “the responsibility of directors is often expressed as being collective but is never enforced in a collective way”.

As one would expect, the book examines both legislative provisions (and related case law) and corporate governance codes relevant to director decision-making in the UK. However, the author also compares and contrasts the legal contexts of directors’ decisions in the UK with those of the USA, Germany, and Australia. The book also examines relevant management theory, economic theory, and behavioural studies.

This book will be of interest and assistance to those seeking to understand the role of directors within a private or public organisation.

The Justice Factory

"Show Me the Judge and I'll Tell You the Law"

Ian Mitchell

PUBLISHER: CREATESPACE INDEPENDENT PUBLISHING PLATFORM

ISBN 978-149646489

PRICE: £8.99 (e-book £3.07)

The starting point for Ian Mitchell’s book appears to lie in a remark made by Ian Hamilton QC during a conversation about Scots law. “Show me the judge and I’ll tell you the law”, said Hamilton to the author, an aperçu which the latter describes as “startling”, although it will surely come as little surprise to those who appear in courts with any regularity.

Mitchell, in fact, is so impressed that he refers to it throughout The Justice Factory as “Hamilton’s Rule”, which would come as a surprise to several generations of jurists. “The prophecies of what the courts will do in fact, and nothing more pretentious, are what I mean by the law”, wrote American Supreme Court Justice Oliver Wendell Holmes Jr, in 1897. Jerome Frank’s 1930 book, Law and the Modern Mind, described as a “myth” the proposition that judges decided cases by applying legal rules. Frank reputedly went so far as to claim that a case might turn on what the judge had for breakfast. (Many of us may have encountered judges like that.)

In any event, Mitchell uses what he calls “Hamilton’s Rule” as a springboard to explore the judicial decision-making process, starting with an examination of a few cases – some foreign, some Scottish – in which the process was key to the outcome. This in turn leads to the book’s USP: an exploration of the philosophy of the Scottish judiciary through a series of interviews with a self-selecting cohort of serving and retired Scottish judges, named and anonymous, obtained in the face of resistance from a succession of Lords President. It yields both genuine insights – about the workload, the fear of civil service interference, the method of recruitment, and so on – and plenty of good gossipy fun. (There’s also a lengthy and interesting detour into the curious business of the police closing Edinburgh Sheriff Court to the public on 6 July 2005, when the court was due to be dealing with the custody appearances of protesters against the G8 summit at Gleneagles.)

And from all of this, Mitchell draws two conclusions. First, an independent judiciary is an essential protector of the rule of law. Judicial independence, in this sense, means a freedom from bureaucratic accountability and political control: “A judge can either be accountable – in the sense of reporting on operational matters to a superior – or independent, but not both.” And secondly, public approval of the courts and judges is necessary.

How, though, can these be achieved? Here, The Justice Factory falls short. Mitchell’s contention is that “the best successful judges know when to rely less on law and more on their own convictions and conscience… Law should be a tool of the judge, rather than the judge being a tool of the law. That is why the character of judges is the central issue in any successful legal system.” But this sits uneasily with the book’s examination of the 1990s case of Macfarlane v Tayside Health Board, which quotes criticism – from which the author does not dissociate himself – of the decision of Lord Gill, then sitting as a Lord Ordinary, suggesting that it was reached because his Lordship is a practising Catholic, and was swayed by his personal beliefs rather than the law. That, though, is exactly what Mitchell would like judges to be doing a little more of, if I have understood him correctly.

Moreover, this can be contrasted with the author’s passing, and disapproving, reference to the 1927 US Supreme Court case of Buck v Bell, in which the court declined to hold that a Virginia statute permitting the mandatory sterilization of those with a learning disability was unconstitutional. He notes that only one judge dissented, but fails to mention that it was Pierce Butler, who was – and you can probably guess where this is going – a Catholic, whose faith was generally thought to have affected his decision. Yet, at the same time, who is to say that when Justice Holmes spoke for the majority in Buck, and asserted that “three generations of imbeciles are enough”, he was not using his conscience?

It is difficult to reach any conclusion other than the obvious one. We may be content with judges who exercise their conscience when making decisions; but only, I would suggest, when their beliefs are roughly aligned to our own, otherwise we regard it as unsatisfactory, if not dangerous.

Mitchell’s consideration of the present recruitment mechanism also offers criticism without solution. He suggests that the Judicial Appointments Board, with its lay influence, is not best suited to selecting the most appropriate candidates. It would be unacceptable, though, as he must know, to return to a system in which the head of the prosecution service takes “soundings” in order to appoint a judge, occasionally himself, on a cut-of-the-jib basis. Equally, an overtly politicised system, such as that which pertains in America, with intense public scrutiny of candidates, would over time constitute perhaps a greater threat to judicial independence. Mitchell seems to have no better suggestions to make, leaving one reader at least to wonder whether the system we have arrived at is possibly the least worst, which may not be what the author intended. The Justice Factory is entertaining and diverting; with more rigorous analysis and reasoning, it might have been better yet.