(FORTUNE Magazine) – You're on the board of a big company that's rumored to be Icahn's or Farley's next takeover target. Soon you may have to respond to events, and you want to make sure what you do is lawful and right. So you call in the best experts you can find to brief you on recent developments in directors' law. And by the time they're finished, you're ready to throw up your hands in frustration, quit boardroom life for good, and go open a little craft shop on Kauai. Such at least is one plausible reaction to Board Games: The Changing Shape of Corporate Power (Little Brown, $19.95), in which three legal specialists -- Arthur Fleischer Jr., a top Wall Street lawyer, Geoffrey Hazard Jr., a prominent Yale authority on legal ethics and procedure, and Miriam Z. Klipper, an attorney and former editor at Institutional Investor -- discuss the current state of takeover law as it affects target boards. That state is not encouraging: Whatever you do as a director in these battles, you're apt to get sued. Board Games walks the reader through various landmark cases, starting with the harrowing 1985 tale of Smith v. Van Gorkom. Trans Union, the big tank-car leasing company, got a cash buyout offer from the Pritzker family for $55 a share, roughly twice book value and at a seemingly handsome premium over the $38 market price. Trans Union CEO Jerome Van Gorkom heartily recommended that his board take the offer; the board's outside counsel warned they might well be sued if they didn't take it. They did, the shareholders voted their assent, and the deal was done. Someone sued anyway, claiming the board could have obtained an even better price had it shopped the company around more energetically. And then, bam: Nine directors, of impeccable standing in Chicago business circles, were found liable personally for the notional extra sums they might have secured for shareholders. Total payout: $23.5 million, of which insurance covered less than half. The story ends short of domestic calamity only because Jay Pritzker volunteered to pick up most of the directors' bill. The lesson you might draw from this is that your No. 1 obligation as a board member is to get top dollar for shareholders, and that courts enforce this duty at sword point. Wrong. Because the next case you learn about is Moran v. Household International, the first ruling on the ''poison pill.'' TO REPEL an expected bid, lawyers for Household, a widely diversified conglomerate, devised an issue of warrants that would inflict ruinous stock dilution on the surviving firm in the event of hostile takeover. The suicide threat made no sense as a way to get anyone to increase a hostile bid; indeed, in a masterstroke of creative lawyering, it was given so many complications that no one could be sure how it would work at all. (Raiders detest legal uncertainty.) Obviating hostile bids might allow Household's management to relax, but it was hard to see how it could do anything but hurt shareholders. This time a dissident director and prospective bidder, John Moran of the Dyson-Kissner-Moran investment firm, went to court, asking not for the brutal recourse of cash damages against his fellow directors but merely for an order surgically extracting the poison pill. He lost. The same Delaware court that earlier that year had shot down the shareholder-enriching Trans Union board cheerfully declared Household's poison pill a legitimate exercise of the directors' ''business judgment.'' Why hadn't the business judgment rule saved the Trans Union directors? Because they had voted too briskly, skipping study, discussion, or the consulting of outside opinions, and had thus breached their ''duty of care.'' The Household directors, by contrast, hadn't been neglectful or inattentive at all about what they had done to investors. If anything, you might say they had been gleefully deliberate. A third case, on a ''crown jewels'' defense, confirms the point. Typewriter- cinnamon-paint conglomerate SCM was struggling to avoid the embrace of Hanson PLC. As part of a rescue deal, SCM agreed to sell its successful food and pigment divisions to Merrill Lynch for a good bit less than they would likely have fetched in an orderly sale. This time a federal appeals court overruled the board and undid the sale, but again on the narrow ground that the directors had acted too hastily. The cynical moral you might draw, then, is: If you're going to deprive your shareholders of full value, never do so through carelessness or inadvertence; make sure it's on purpose. Of course that would be a bit too glib. For one thing, no summary can hint at all the legal complexities. In Household's case, for example, the court convinced itself that poison pills might be legitimate in foiling certain raider tactics. NONETHELESS, there's a sort of mad logic at work here. The courts don't like to pass judgment on the merits of business strategies, and we should be glad they don't: They would probably do a wretched job of it. They're much better equipped for the more modest task of making sure company leaders have taken visible steps to inform themselves before voting. Trouble is, the emphasis on a superficial demonstration of care encourages the bureaucratic approach. The up-to-date board now gets advised to put off major decisions until it can stage a parade of credentialed experts between high snowbanks of paper -- not always the best way to pursue a personal vision or seize a fleeting opportunity. Board Games has a cogent passage on this clash between the cultures of business and law. The business people, facing choices while the clock ticks, feel they must ''decide one way or the other, on the basis of reasoning they haven't time to expound and sources of information they may not be able to sort out.'' The lawyers, on the other hand, know the company's fate may hang on how a court reconstructs the remnants of a paper trail after a lapse of years. In the age of litigation, bulletproof documentation beats inspiration or well-honed intuition. It gets worse. A great show of care, while helping your odds, won't keep you from getting sued a lot. Some thoroughly considered tactics do get struck down on the merits -- Revlon's poison-pill defense against Ronald Perelman did -- and many others must be justified at length in court. Board Games isn't nearly as well written or argued as you would have hoped from these authors. No effective theme emerges from the slapdash presentation. The occasional nugget comes amid stretches of choppy narrative, rather too large chunks of which, in at least one chapter, are downloaded more or less verbatim from the Delaware court's opinion, without attribution. Delaware and other states hastened to end the Van Gorkom reign of terror through laws letting companies immunize boards against much personal exposure. The guillotine's retirement is welcome, but the pace of the underlying revolution is unlikely to let up much. Ever more corporate deals that displease management or some other interested party will continue to be resolved in court, under vague standards, through injunctions if not cash damages. WHICH IS A SHAME. This kind of litigation, like most other kinds, is chancy and absurdly expensive. Of that $23.5 million Trans Union payout, less than a quarter got through to anyone who was supposedly harmed, while $18 million went to attorneys' fees. It's enough to make investment bankers look like a bargain. If the law were in healthy shape, all three sides -- boards, bidders, and managers -- would get reasonably clear marching orders, and only the odd or unexpected case would have to be taken to court. Board Games accurately portrays -- but does not sufficiently lament -- the arrival of a system where no deal can be made lawyer-proof, and the aim of the players is no longer to avoid litigation but just to prepare for its miserable ordeal.

BOX: EXCERPT:The courts can second-guess the directors. There is no longer an unquestioning presumption that a board has performed its responsibility. A court's holding that a tactic is reasonable is a substantive judgment. To a novel but uncertain extent, therefore, the directors are now subject to judicial reversal.

BOX: The board is something like the captain of an ocean liner who walks around watching and taking salutes to show he is on the job. But is he really keeping an eye on things or is he simply taking salutes? That is the question a director has to be prepared to answer in court.