On his book The Rise of the Working-Class Shareholder: Labor’s Last Best Weapon
Cover Interview of June 03, 2018
The wide angle
I backed into this topic, largely by accident. I began my
legal career litigating corporate and securities cases at a New York law firm.
I recall commiserating with a friend at my fifth-year law school reunion,
saying we’d rather be suing our clients than representing them. Shortly
thereafter, I switched to a plaintiff-side class action firm that brought
securities fraud lawsuits—cases like Enron, WorldCom, or today, Wells Fargo—on
behalf of investors. Many of the clients of the firm were public pension funds
and labor union funds. There would be court hearings or settlement negotiations,
and in the middle of this very Wall Street world of bankers, lawyers, and
accountants, you’d have teachers, firefighters, union leaders on behalf of
their defrauded pension funds. They impressed me, both with their skills, the
seriousness of purpose that they brought to the task, and their motivation. I
found their perspectives to be a very welcome breath of fresh air. They were
the only folks in the room to whom the outcome really mattered in a direct and
personal way, and they injected that perspective into the work.
When I entered academia, I spent a few years closely
studying the litigation behavior of these funds. They played a very productive
role bringing fraud and deal suits. From there, my interest in their role as
investors expanded quickly. Their investor activism operated on many fronts,
and I increasingly developed the conviction that they were an extraordinarily
important voice for working-class and middle-class people whose interests were
being increasingly ignored by the most powerful institutions in our society. I
began attending conferences of pension trustees and inviting activists to my
seminar on “shareholder activism.” I wrote the book to tell their story, to
point out the legal and political challenges they face, and also the great
potential of their work, particularly in an age when capital markets are so
ascendant.
My book picks up a conversation that began in the 1970s,
usually credited to Saul Alinky’s Rules for Radicals. In that book,
Alinsky advocated what he called the “proxy tactic.” He offered an early
example of this kind of shareholder activism, in which he and others led a
proxy campaign, using the shareholder voting power of churches and others, to push
Kodak to act on racism and economic inequality in Rochester, New York, the
company’s headquarters. Two other noteworthy books followed in the late 1970s—Peter
Drucker’s The Pension Fund Revolution and Jeremy Rifkin and Randy
Barber’s The North Will Rise Again—both of which discussed the prospects
for worker-based pension power. Since then, there have been several academic
treatments of the topic, in both book and article form. Economist Teresa
Ghilarducci has been a noteworthy contributor to that debate. I think my book
advances this whole line of thought both by reassessing fiduciary duty in light
of twenty-first century challenges, and by reframing the pension reform debate
as one not just about paying workers but about shareholder voice and
shareholder power.
The wide angle
I backed into this topic, largely by accident. I began my legal career litigating corporate and securities cases at a New York law firm. I recall commiserating with a friend at my fifth-year law school reunion, saying we’d rather be suing our clients than representing them. Shortly thereafter, I switched to a plaintiff-side class action firm that brought securities fraud lawsuits—cases like Enron, WorldCom, or today, Wells Fargo—on behalf of investors. Many of the clients of the firm were public pension funds and labor union funds. There would be court hearings or settlement negotiations, and in the middle of this very Wall Street world of bankers, lawyers, and accountants, you’d have teachers, firefighters, union leaders on behalf of their defrauded pension funds. They impressed me, both with their skills, the seriousness of purpose that they brought to the task, and their motivation. I found their perspectives to be a very welcome breath of fresh air. They were the only folks in the room to whom the outcome really mattered in a direct and personal way, and they injected that perspective into the work.
When I entered academia, I spent a few years closely studying the litigation behavior of these funds. They played a very productive role bringing fraud and deal suits. From there, my interest in their role as investors expanded quickly. Their investor activism operated on many fronts, and I increasingly developed the conviction that they were an extraordinarily important voice for working-class and middle-class people whose interests were being increasingly ignored by the most powerful institutions in our society. I began attending conferences of pension trustees and inviting activists to my seminar on “shareholder activism.” I wrote the book to tell their story, to point out the legal and political challenges they face, and also the great potential of their work, particularly in an age when capital markets are so ascendant.
My book picks up a conversation that began in the 1970s, usually credited to Saul Alinky’s Rules for Radicals. In that book, Alinsky advocated what he called the “proxy tactic.” He offered an early example of this kind of shareholder activism, in which he and others led a proxy campaign, using the shareholder voting power of churches and others, to push Kodak to act on racism and economic inequality in Rochester, New York, the company’s headquarters. Two other noteworthy books followed in the late 1970s—Peter Drucker’s The Pension Fund Revolution and Jeremy Rifkin and Randy Barber’s The North Will Rise Again—both of which discussed the prospects for worker-based pension power. Since then, there have been several academic treatments of the topic, in both book and article form. Economist Teresa Ghilarducci has been a noteworthy contributor to that debate. I think my book advances this whole line of thought both by reassessing fiduciary duty in light of twenty-first century challenges, and by reframing the pension reform debate as one not just about paying workers but about shareholder voice and shareholder power.