Professional Innovation: Corporate Lawyers and Private Lawmaking

Through an intensive examination of the development and diffusion of a new legal device—the shareholder rights' plan or poison pill—this article demonstrates the entrepreneurial, lawmaking role of corporate lawyers. This study case suggests that corporate lawyers may act as legal entrepreneurs, developing and promoting new legal devices and strategies on behalf of actual and potential clients. If affirmed by the courts, these devices or techniques are rapidly diffused thereby contributing to the creation of new legal knowledge. The creation and successful defense of the shareholder rights' plan led to both new caselaw and statute law. In this way, corporate practitioners contribute to the creation of new legal knowledge, suggesting a bottom-up approach to knowledge creation rather than the conventional top-down view. It is suggested that legal innovations like the shareholder rights' plan are more likely to be developed in newer firms than in established firms and in specialized firms than general service law firms.