Page 30 - Delaware Lawyer - Winter 2020

FEATURE
Kenneth J. Nachbar
OF COUNSEL: Chancellor William T.Allen
1948-2019: A Personal Retrospective
With the passing of Chancellor William T. Allen last October, we lost a legal giant. Much has been written about Chancellor Allen’s distinguished judicial and academic career; perhaps no retro- spective of his judicial legacy is bet- ter than his 2018 interview for the Institute for Law and Economics at the University of Pennsylvania.1 My goal is not to attempt to recapitulate that, but rather to provide a more personal retrospective.
I joined Morris, Nichols, Arsht
& Tunnell in 1981, when Bill Allen
was a 33-year-old partner. While
he went on to become one of Dela-
ware’s most distinguished Chan-
cellors, his focus at that time was
not corporate law. Rather, Bill was
spearheading cases arising out of
the 1970s gasoline price controls. As those legacy cases wound down, Bill became primarily a commercial lawyer following Del- aware’s passage of the Financial Center Development Act, and was instrumental in helping JP Morgan establish its Delaware banking operations.
I worked with Bill on some of the energy regulation cases. His office was near mine, and he quickly became a sounding board, not only on legal issues, but on navigating life as a young associate at Morris Nichols. I later worked with Bill on Royal Dutch Petroleum’s transaction to take Shell Oil private, which spawned substantial corporate issues and litigation. Bill was al- ways able and, as importantly, willing to dispense helpful advice and, as a result, he quickly became a “go to” person for all man- ner of questions large and small. At the time, I thought of Bill as a lawyer who could fill many roles, given his diverse background; I did not realize then that he could and would be a virtuoso at anything he became involved in.
Even after becoming Chancellor, Bill continued as a mentor — I recall him taking me aside at a Christmas party following resolution of a case before him, providing helpful advice on what I had done well and what I might have done differently.
When Bill was appointed Chancellor in 1985, I did not quite know what to expect. Back then, the Chancery bar was a pretty insular group, in part because unreported decisions were crucial, but often not available on Lexis or Westlaw. It was probably as much lore as law, and practitioners either knew the cases or they didn’t. Since Bill was not extensively involved in Chancery cases at the time, he was not as familiar with those decisions as others.
But Chancellor Allen brought to the Court two attributes that were more important than any specific knowledge of recent cases or court procedures: first, he had a keen un- derstanding of fiduciary duties and equity. I imagine that the term “cestui qui trust” appears in more Chancellor Allen corporate opinions than those of any other jurist. Sec- ond, he had an equally keen under- standing of where corporate law fit in the larger framework of society, and how the fiduciary and equitable principles he understood so well fit in with those larger societal goals and needs. Those principles were Chancellor Allen’s Polaris. Based on their consistent application, he was able to guide Delaware corporate law through all manner of challeng-
es, including essentially writing the rules for corporate takeovers and mergers that developed through his tenure as Chancellor. Chancellor Allen’s many decisions brought a sophistication and intellectual rigor to the Court of Chancery, apparent in the writ- ings of his successors on the Court. In this regard, Chancellor Allen’s influence is manifest.
A great example of Chancellor Allen’s approach to legal prob- lems is his decision in In re Caremark International Derivative Litigation.2 Caremark sets forth the rules governing Delaware directors’ duty of oversight. Prior to Caremark, the law in this area was simple, if not simplistic — in 1963, the Delaware Su- preme Court had decided Graham v. Allis-Chalmers Manufac- turing Co.,3 essentially holding that corporate directors could be liable for failure of a duty of oversight only if they were presented with a red flag that they ignored. It was a rather unsophisticated test, but one that no one questioned in the 25+ years following its pronouncement. Caremark came to Chancellor Allen upon the proposed settlement of a garden-variety derivative claim aris- ing from a government investigation and related litigation. He used the occasion to rewrite Delaware law concerning the duty of oversight, essentially importing factors identified in the fed- eral sentencing guidelines as establishing the normative goals for board oversight. As one of the practitioners involved in the Caremark case, I can attest that none of this came from, or even occurred to, the lawyers litigating the case. In retrospect, it seems obvious that the sentencing guidelines would inform
See Of Counsel continued on page 26
28 DELAWARE LAWYER WINTER 2020