Goolsby on Goolsby
The author of Goolsby on Virginia Corporations tells all
Published in 2007 Virginia Super Lawyers magazine
By Elizabeth Wasserman on June 25, 2007
Allen C. Goolsby wrote the law on Virginia corporations. Literally.
The evidence lines the bookshelves in his Hunton & Williams office overlooking the James River in Richmond. There’s a copy of the Model Business Corporation Act, a law most states have adopted, which is written by the invitation-only American Bar Association’s Committee on Corporate Laws; Goolsby is now serving his second six-year term on that committee. Nearby sits a bound version of the Virginia Stock Corporation Act; the Virginia General Assembly records list Goolsby as the law’s principal draftsman.
But that’s small potatoes. Goolsby, 67, a partner who joined the 1,000-lawyer firm in 1968, reaches up for a thick paperback. Then he winces. He pulled his back earlier that morning helping his 1-year-old daughter, Adelaide, get dressed. Fatherhood is a new role for the man many consider the father of Virginia corporate law. He remarried late in life and now shares stories about being pulled from an out-of-town business meeting in order to start rabies treatment after a bat was found in his house.
Goolsby straightens up and hands me the book: Goolsby on Virginia Corporations. “I didn’t pick the title,” he says, raising his eyebrows from behind his glasses and shrugging.
Associates and friends describe Goolsby as a would-be academic who, like one of his mentors, the late U.S. Supreme Court Justice Lewis Powell, listens to all sides. Once his mind is made up, however, he’s difficult to budge. “He is the oddest combination of being extremely modest while being absolutely certain at all times that he’s right,” says Louanna Heuhsen, a partner at Hunton & Williams who has worked closely with Goolsby since 1985. “Once he has decided that this is what the statute means, that’s the end of it.
“He’s right because he’s Goolsby on Virginia Corporations, after all.”
In his beige-walled office, decorated with a few plaques, baby pictures and a silver gavel from his term as president of the Virginia Bar Association in 1991, Goolsby is currently revising his namesake tome for a third printing. “For some reason [in the last edition], they put a very nice picture on the cover, but it isn’t me,” he muses. “I have no idea who it is. When they asked me to revise it, I said, ‘OK, but no pictures this time.’”
Goolsby was born to Adelaide and Allen C. Goolsby Jr., a local paint store owner, in Richmond in 1939. He attended St. Christopher’s School, an Episcopal school for boys, from first through 12th grade. During his senior year, his father died, and Goolsby was taken under the wing of a family acquaintance, Ralph Nesbit, who pushed the boy to apply to Nesbit’s alma mater, Yale. When finances became an issue, Nesbit contacted Paul Mellon, the son of banker and industrialist Andrew Mellon, and a Yale graduate, and he wound up financing Goolsby’s education. “I really regret that I never had the opportunity to meet him,” Goolsby says of his benefactor.
For the born-and-bred Southerner, the New Haven environment was both intimidating and stimulating. His first class was Spanish. Goolsby had studied the language in Richmond, but he remembers, “I was surprised that it was taught entirely in Spanish. I felt out of my league. I wanted to go home right that minute.” He stayed, acclimated and graduated with honors in history.
In 1961, he enlisted in the U.S. Navy. It was during a frigid part of the Cold War, rumblings from Vietnam were being heard, and Goolsby was stationed on a small tank-landing ship based in San Diego. During the Cuban Missile Crisis, he recalls sitting in the radio room and watching a teletype machine spewing out coordinates of the missiles, feeling as if the nation were on the precipice of World War III. Almost as scary: Goolsby found himself, after just 16 weeks of training, presiding over a wild and occasionally reckless group of young sailors. “I have no idea how we made it from San Diego all the way to Pearl Harbor,” he says.
Three and a half years later, Goolsby, with an obvious penchant for presiding over wild and reckless youth, was teaching history and economics to seventh-graders in Richmond public schools. On a whim, he applied to the University of Virginia’s School of Law. “Two weeks before law school started, I decided I wanted to attend business school instead,” he recalls. “I raced up to Charlottesville and met with the dean of the business school. After a conversation of an hour or so, he convinced me that, no, what I really wanted to do was to go to law school.”
During the summer of his second year, Goolsby served a clerkship at what was then Hunton, Williams, Gay, Powell and Gibson. Two people with whom he worked would help direct his future career. The first was Lewis Powell.
Goolsby went to work for Powell after graduating in 1968. Powell was already well-known—he had served as president of the ABA, and represented paper manufacturers, timber companies, department stores and a tobacco company—but few at the firm were prepared when, in 1971, after two previous nominees failed to win Senate confirmation, President Nixon appointed Powell to the U.S. Supreme Court. “It was in the early phase of the nightmare that now surrounds the selection of Supreme Court justices,” Goolsby recalls, and Powell was advised to put together a team to prepare for the confirmation hearings. Goolsby recalls holing up in D.C.’s Hay-Adams Hotel for weeks, quizzing Powell about everything he’d ever said or written. “And he’d said a lot,” Goolsby says.
Powell served on the court until 1987, leaving a legacy as a moderate judge who cast swing votes on affirmative action and other issues of the day. As a mentor, his impact was just as long-lasting. “Everything was balanced,” Goolsby says. “If you engaged in a discussion of the issue, he acknowledged that there was more than one rational view.” Powell was also extraordinarily driven, working seven days per week, sans vacations. Friends called him by an accounting term—“LIFO”—which referred to his behavior at cocktail parties. “He was always the last one in,” Goolsby says, “and the first one out.”
These days, according to Heuhsen, it’s Goolsby who’s the LIFO. “If there are kids down here working until 2 in the morning,” she says, “he’s down here working until 2 in the morning as well.”
In addition to Powell, Goolsby worked for George Gibson. Gibson had served on the ABA’s corporations committee in the early 1950s when the group developed the first Model Business Corporation Act. It’s one of the few instances where lawyers get involved in writing legislation. By the time Goolsby landed on the committee, the panel was working on revising the model act.
Goolsby took the lead, and the revisions were adopted in Virginia in 1985. The biggest change involved the creation of the statutorily defined standard of conduct for boards of directors. Delaware, where many companies incorporate, does not define this standard by statute and instead uses case law. The model act did have a standard defined in the statute, but Goolsby believed it would be “too risky for a director” and would “make the decision-making process subject to a negligence standard”—as if, he adds, the director were driving an automobile and got into a car accident.
Goolsby goes to his bookshelves again and pulls out the Virginia Stock Corporations Act. He thumbs to Section 13.1-690 and points to the passage that reads: “A director shall discharge his duties in accordance with his good faith business judgment of the best interests of the corporation.
“Business involves risk taking,” he adds. “As long as the director engaged in good-faith business judgment and had the right intentions and made a properly informed decision, we don’t need a judge in there looking to wring every last penny out of these people.”
Of course Goolsby has strong opinions about the recent black marks against CEOs and COOs. “Certainly those people out here cooking the books and intentionally holding back bad news, back-dating of stock options … that’s the type of stuff you ought to get nailed for,” he says. Then he casts the issue in larger terms. “Sometime in the late 1980s or early 1990s, we as a people lost our priorities, our sense of proportion and time,” he says. He attributes the change to our rapid transformation from industrial to information-driven society, the rise of small companies and the shift from individual shareholders to institutional shareholders—such as mutual funds.
“He’s been like an Encyclopedia Britannica to me,” says Luke Kissam, senior vice president and general counsel for Albemarle Corp., a specialty chemicals company. Goolsby, who has served as its outside counsel since it was known as Ethyl Corp., a fuel-additive manufacturer based in Richmond, helped Albemarle through the acquisition of a refinery catalyst business from Akzo Nobel, a Dutch company, and through a secondary stock offering. “His steady hand helped guide us through the questions he knew the board was going to ask and the questions he knew the large shareholders would ask,” Kissam says. “His intuition serves him just as well as, if not better than, his knowledge of the law.”
A life insurance company, First Colony Life, also spun off from Ethyl in the early 1990s. Goolsby helped that company with its acquisition by GE Financial Assurance, along with the combined company’s subsequent move to Richmond. “He knows everybody in the Richmond government relations arena,” says Leon Roday, general counsel to GE Financial Assurance, now Genworth Financial. Roday says that Goolsby helped introduce the firm to the governor’s office and state legislators. “He was very helpful in establishing a relationship between our company and the individuals we needed to discuss our potential move here.”
Not all of Goolsby’s clients are in Virginia. In 2003, he started representing the board of directors of Clayton Homes, a Tennessee-based mobile home manufacturer, after shareholders objected to a proposed $1.7 billion acquisition by billionaire investor Warren Buffett’s Berkshire Hathaway. “There was this perception, that was hard to fight off, that if Warren Buffett wanted to buy the company, we the shareholders shouldn’t want to sell it,” Goolsby says. “The assumption was that Buffett surely intended to make a large profit off of the acquisition, which must mean the offer price was too low.” Goolsby, who had helped guide companies through the acquisition and sale process many times before, helped by keeping the board informed every step of the way. The acquisition was approved after two shareholders meetings and multiple lawsuits, which ended when the Tennessee and Delaware courts rejected the shareholders’ challenge.
Goolsby, reappointed to the ABA’s Committee on Corporate Laws in 2006, sees the development of model law for corporations as important because to have 50 very different state laws governing corporations might impede commerce. Of course, the model law is by no means adopted unchanged by every legislature. “You’ll get more nuances than dramatic differences between the state laws,” Goolsby says. “This way, you don’t get blindsided by some strange law.”
New questions the ABA committee will focus on involve the growth of activist shareholders who want to shift the balance of power. For example, they want to elect directors by majority vote rather than a plurality of votes. “I’m torn on that one,” Goolsby says. “If someone has more votes cast against them than for them, that’s a real red flag. On the other hand, I’m leery that good directors are not going to be willing to serve if directors are frequently voted out of office.” A closely related issue involves questions about the ascendancy of hedge funds and private equity funds and their ability to borrow shares and use derivative securities to get voting rights without economic ownership. “I view a hedge fund as somebody trying to make a quick buck,” Goolsby says. “I think American business is better if control is in the hands of people who invest for the long term.”
He finds such topics endlessly fascinating. “Some of these concepts, which may seem technical,” he says, “go to the heart of the success that American business is today.”
He should know. He wrote the book.
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