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Kevin LaCroix's recent analysis of board fiduciary duties, based upon a January 2015 Harvard Business Review article entitled “Where Boards Fall Short”, endorses a shift of traditional fiduciary analysis from questions of liability and defense to questions of offensive and proactive stewardship; specifically, are directors using their fiduciary duties "as a guidepost to help boards fulfill their 'core mission' of 'providing strong oversight and strategic support for management’s efforts to create long-term value'."

The Harvard Business Review article posits that boards are currently falling short in achieving this goal, an observation supported by the article's survey of over 600 executives and directors. However, per LaCroix and the HBR article, if directors can keep their fiduciary duty firmly in mind, disruptive innovations – leading to new goods, services, markets, and business models – can help propel the company and the overall economy forward. This could allow boards to spend less time talking about short term results and avoiding litigation (which, speaking as a litigator is a good thing) and more on advancing the core mission while complying with required regulations and enhancing value.

To achieve these lofty goals, focus should be on people – getting a board of mixed backgrounds and expertise – and process – more quality meetings and new metrics to measure compliance, achievement of long-term goals, and other things that do not necessarily show up on a balance sheet. Another key to creating sustained value is to engage long-term investors, allowing them an equal voice as those focused on short term victories. The authors further extend this long-term focus to compensation as well, encouraging board members “to really get directors thinking and behaving more like owners.”

As LaCroix correctly observes: "The authors’ creative use of fiduciary duty  principles can help to 'bring about a deep shift in culture, behavior and structure of public company boards,' to help companies to 'deliver the kind of sustained value creation that long-term shareholders expect and that our society deserves'."

And, as a litigator, I think demonstrated oversight and strategic planning focused on value-creation is a great asset when questions of fiduciary duty arise; after all, the best defense is often a good offense.

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