Sometimes the shareholders need  level playing field.
The 1980s was the peak time when the corporate sharks could have your company for breakfast and you couldn’t do much as a shareholder.

The shareholders desperately needed some equal playing field.

And this came at the time when the Corporate power struggle started showing its teeth, which brought the need to ward off the Corporate sharks. The shareholders rights plan is popularly known as poison pills since it is a type of defensive tactic used by the board of directors against a hostile takeover.

In case of hostile takeovers an open offer is directly made to the shareholders. Such a takeover may help to unlock the hidden value of the shares and puts pressure on the management to work efficiently.
But  it also has the potential to havoc the normal functioning of a target company.

Such a plan activates itself and gives shareholders the right to buy more shares at a discount if one shareholder buys a certain percentage or more of the company’s shares beyond a predefined threshold.

For example, if any shareholder acquires 20% of the company’s shares, at which point every shareholder (except the one who possesses 20%) will have the right to buy a new issue of shares at a discount.

If every other shareholder can buy more shares at a discount, such purchases would dilute the bidder’s interest substantially, and the cost of the bid would make the price skyrocket. The objective is to make it unfeasible for the buyer to proceed with takeover of the corporation without the board’s approval. Buyer has no option but to first negotiate with the board to revoke the plan.

Flip-in

This clause permits shareholders, except for the acquirer, to buy additional shares at a predefined discount. This provides investors with instantaneous profits. This pill also diluted shares held by the acquiring company, making the takeover attempt far more expensive.

Flip-over: Exodus of Talents

Acquirer’s shares after the merger are available at a discount to shareholders. Hence, a shareholder may gain the right to buy the stock of its acquirer, in subsequent mergers at say 2:1 ratio.

The rider can re-phrase all its employees’ stock-option grants to ensure they immediately become vested if the company is taken over. Employees can then exercise their options and then dump the stocks. With the release of the “golden handcuffs,” disgruntled employees may quit immediately after having cashed in their stock options, But creates an exodus of talented employees, bringing down the value of the target. In many high-tech businesses, attrition of talented human resources may result in a diluted or empty shell being left behind for the new owner.

The target assured  if it were acquired within 24 months by its rival, and product support were to be reduced within four years.

This obligated them to refund their customers between two and five times the price of software licenses.

Still, the acquisition prevailed, the likely cost to Oracle was much as US$1.5 billion.

Voting plan

In this method, the company releases preferred stock with superior voting rights over that of common shareholders and prevent an unfriendly bidder despite acquiring a substantial quantity of the target firm’s voting common stock from being able to exercise control over its purchase.

For example, ASARCO established a voting plan in which 99% of the company’s common stock would only harness 16.5% of the total voting power.

This is undoubtedly the most important invention in the field of corporate of law. Not all the poison pills may be completely legal everywhere, and in addition to these pills, a “dead-hand” provision allows only the directors who introduce the poison pill to remove it (limited by pre-set time after their placement), thus potentially delaying a new board’s decision to sell a company.

Just like any complex system or product software apps are not build from scratch (for most cases). Just like you don't get a car out chiseling block of cast iron. Same is true for mobile apps in your phone.

This has mirad requirements to talk to other programs or services in order to function and provide you information. Including ways in which the  two or more than two programs or functions can talk to each other. Especially when a piece of written instructions which operates hundreads or thousands of pieces of previously written instructions written by different people at different times which maybe subject to not only different computer languages but also  versions i.e  different standards.

Now how do these two systems talk to each other is precisely what an API is all about. API defines the parameters which two entities understand to be able to talk to each other.  It'slike you have gone to a foreign land and you need to learn how to communicate with someone who doesn't speak your language without internet.
To resolve this problem a set of rules are defined which allows the subjects to communicate with each other.
The below videos explains an API with the help of restaurant as an analogy.

DATA FLOW

When any two entities communicate transfer of data takes place, it can be airline prices or latest stock prices or even transfer of funds. The biggest benefit that APi offers it is allows requesting of different types of data, which exposing the underlying software infrastructure.

For example it's like a specific customer phone line which allows to you perform specific pre-determine functions. This also helps in restricting the kind of that can be requested. Providing access via API's is also a very common and successful way protect intellectual property without compromising on the benefits but does add the overhead of maintaing the infrastructure with bandwidth to service the API calls.

RELATIONSHIP

Every complex software product or service can be broken into much simpler parts which along with other parts are required for proper fuctioning. API's are used to take care of the hard part or the parts which are beyond the scope during it's development. And sometimes this requirements can be fairly complex.

Fpr example the what's app owned by facebook but is depending on API from twilio for conducting user authentication via sms. So everytime the what's app needs to verify the number it's dependent on the application programming interface for authenticating the user. It needs to share the user's mobile number and authentication code on which the entire security and what' app is at mercy of the API.

Machines, cannot replace lawyers. This notion has stood the test of time. Not anymore, we are at the tipping point to see shifts of a lifetime, the most profound technological transformation in Human history. The major threat to displace lawyers work comes not from the machines taking over office but, the real trojan horse is application of increasingly sophisticated implementations of applied machine learning. ¹
This change is going to be defined by the way in which cognitive machines take over our decision-making functions — something that can only be performed by humans as we have always believed. While earlier Industrial revolutions had allowed workers the opportunity to raise the value chain, this time it appears that the machines will finally breach the cerebral bastion that we have always assumed will remain our sole preserve. ²
There is a profound message here for lawyers — when you think about tech, the challenge is not just to automate work process that are not efficient. But presents an opportunity to practice law in ways that we could not have done in the past. ³

NOT FOR A SLICE

How can law firms prevent the slaughter of their market share by other firms in this rapidly changing tech landscape? which is also giving birth to new marketplaces, and entirely new employment sectors — with legal information engineering, legal analytics, and licensed software taking centre stage.⁴ Do we need to re-think the age-old notion that legal expertise, can’t be replaced by machines? ⁵
Changes in the following verticals will be the leading cause of disruption:
1) Process
2) Speed
3) Cost

The question that arises is what the firms can do to survive the challenges?

LESSON FROM THE PAST

When was the last time when major shifts in legal practice areas were taking place? Did it catch the majority of law firms by surprise? And what happened to the firms that embraced the change.

In the 1970s all of a sudden, the things that the old-line law firms didn’t want to do — hostile takeovers and litigation — were the things that every law firm wanted to do in America. ⁶ Such cases landed up at the doors of small law firms, who were able to build exclusive expertise, in this under-recognized area of practice. A small 4-people law firm capitalized on this opportunity, and it helped them turn into one of the largest & most powerful legal business in the world. From the mid-1970s to early 1990s, the amount of money involved in mergers and acquisitions every year on Wall Street increased 2,000% peaking at almost a quarter of a trillion dollars. ⁷

How did such small niche firms started were able massively to capitalize on the market?

It was the ignorance of the tailwinds that was about to impact the legal industry.

For about three decades, if you were a Fortune 500 company about to be taken over or trying to take over someone else, or merely a big shot. Joseph Flom has been your attorney & Skadden, Arps has been your law firm, and if they weren’t, you probably wished they were. ⁸Perhaps during the same time, another most famous example of such a substantive innovation is the poison pill defence (shareholder rights plan) crafted in by Martin Lipton in response to the ever-increasing set of corporate raiders who were targeting companies for a hostile takeover.⁹ This time the opportunity is knocking again in the form of 4th industrial revolution. There won’t remain a major practice which can completely shield itself. The odds will further compound way more disproportionately than ever have in history.

TAILWINDS

In India, some legal practice areas can grow at a healthy and sustainable level, certain common factors apply to them:
(1) Personality-driven practices;
(2) volume/functionality driven;
(3) Difficult to replace with machines;
(4) Niche expertise and experience.

These are sectors where the personal expertise of individual lawyers drives the quality of advice or representation. ¹⁰
We are at the inflection point — things are changing very quickly, and the practice of corporate law practice as we know it, I believe is just about to be a thing of the past.-Suhas Baliga
One key challenge for the legal profession, however, is to adopt new systems earlier; to identify and seize the opportunities by emerging technologies. ¹¹

MOATS

Fortifications were required to provide a defence to a king’s castle. These defences were also, known as moats. The wider the moat, the more easily a castle could be defended, as a wide moat made it very difficult for enemies to approach. Similarly, I think moat refers to a law firms’ ability to maintain competitive advantages over their competitors to protect their pricing power, long-term profits and market share.

Because there is nothing that stops a Tier -II or Tier-III law firm to deliver the level of services that Tier-I law firms do. Apparently, apart from costs, there is no easy measurable difference between work done by top law firms, at least from the client side. ¹² Giving no reasons why a client should stick with a particular firm, if the odds get better. Law firms should be prepared to replace labor for capital (i.e., software, process, and other related technology.)

The opportunity for some of the largest financial returns which likely will be obtained by the firms or set of individuals who can help transition the legal industry to the proper reallocation of the legal production function.- Daniel Katz

For example, Allen & Overy developed an online legal service, division which leads to an increase of about additional £12 million in subscription revenues each year. ¹³ There is a need to build a such fortress with high barriers to entry; it may be technological, by way of patents or developing niche area expertise. Hence, the firms must have an incentive structure in place to encourage investments in legal tech.¹⁴ and already this process to build technological moat which shall affect the ability to compete with other firms is already increasing at an alarming rate.

In the above figure you can see there was 484% rise between 2012–16 in the number of patents filed under legal services and document process handling. ¹⁵ What better indicator of tailwinds than these figures? In order to retain the clients, it is necessary for the client to be able to notice process-centric differences between otherwise similar law firms. ¹⁶ Such efforts could reward the law firms with huge competitive moat over other law firms who continue to work in a transitional manner.

The moats provide a competitive edge, which serves three functions:
1. Bring new business
2. Ability to retain the client’s
3. Bestow pricing power on the law firms. And to build and sustain these moats two things are indispensable:

1. INCENTIVE STRUCTURE

Law firms need to have an incentive structure, which could help them transition, their financial resources into investments in technology. Better processes lead to less expensive & more efficient services for the client. For the reward structure to have any real chance of impact, incentive structure is inevitable for development and sustaining the moats.

2. RE-IMAGINE LEARNING

Our current system of education was devised generations behind, during the first Industrial age where value was a direct function from information scarcity. To follow the instructions map written on a piece of paper was all that was required to be successful but not anymore. This architecture of the education system gave rise nothing more than instruction compliance.

In the process, we consciously suppressed our very human tendency to extemporize, as any deviation from the mechanized production processes could be disastrous.
There is need to build education to promote creative thought over rigid process-based solutions. Otherwise, the coming generation will be woefully ill-equipped to deal with their future.- Rahul Matthan

Hence the notion that “well they went to some X elite college or were at the very top of their class.” This reputation signal served as a metric because lawyer quality is among the most difficult of the measurement problems. Not anymore.
To be successful in the future workplace, we will all need to know some computer science. It accelerates our learning, discovery, and understanding of the world. — Brad Smith, CLO Microsoft

Law students would need to develop advanced cognitive skills so that they can parse complex problems in different ways to come up with unorthodox solutions that are not immediately obvious.¹⁷

References:

[1] See Mitchell Kowalski, Avoiding Extinction: Reimagining Legal Services for the 21st Century (2012); Bruce Macewen, Growth Is Dead: Now What? Law Firms On The Brink (2013); Mehryar Mohri Et Al., Foundations Of Machine Learning (2012);
[2] Susskind, Richard. Tomorrow’s Lawyers: An Introduction to Your Future (Kindle Locations 344–346). OUP Oxford.
[3] Rahul Matthan, Education Needs Disrupting.
[4] Id.
[5] Richard Susskind, Tomorrow’s Lawyers: An Introduction to Your Future pg 13
[6] Erin Winick, Lawyer-Bots Are Shaking Up Jobs.
[7] Malcolm, Gladwell Outliers, The Story of Success Chapter 5 The Three lessons of Joe Flom, pg 118.
[8] Id.
[9] Liz Hoffman, Martin Lipton: Poison Pills are “Critical in the Face of Increased activism
[10] Suhas Baliga, should you invest in building a corporate law firm today?
[11] Susskind, Richard. Tomorrow’s Lawyers: An Introduction to Your Future (Kindle Locations 323–324). OUP Oxford.
[12] Katz, Daniel Martin, The MIT School of Law? A Perspective on Legal Education in the 21st Century University of Illinois Law Review, №5, 2014.
[13] Id.
[14] Susskind, Richard. Tomorrow’s Lawyers: An Introduction to Your Future (Kindle Locations 748–749). OUP Oxford.
[15] Id.
[16] Supra note 12
[17] Supra note 1
[18] Supra note 2