Saturday, September 8, 2012

Random Notes, Part II: Watchdogs and the Bad Man View of the Law

My son called to my attention an article by Anthony Hilton in the British trade publication PRWeek, tracing the roots of the Libor rate-fixing affair to a rotten culture at the heart of the banking industry. (The article is, unfortunately, behind a subscriber's login.) Hilton notes that "the reason why in some companies things appear to have gone badly off the rails is that the in-house lawyer, whose traditional role was to keep the company on the straight and narrow, no longer fulfils that role in the same way." In other words, one of the keys to the corruption that has crept through the corporate world is lawyers no longer play the role they once did.
In earlier times when the lawyer saw behaviours in the organisation that he or she thought could be a source of reputational risk, they would inform the board that the policy was unacceptable and would have to be changed. Today the guidance is that the behaviour is unacceptable but if the company wants to continue with it, then it needs to structure it in a certain way. In other words, ensuring the corporate culture complied with the spirit of the law has given way to compliance with the letter of the law.
To the extent there is a bright spot in this rottenness, according to Hilton, it belongs to the PR and communications people inside these companies, who now put much of their focus on "internal comms . . . spotting where the company is behaving badly, forcing the matter to the attention of the board and getting it stopped before it causes real damage."

On first read, I didn't know whether to be pleased with the watchdog role now being taken (at least according to Hilton) by communications people (that is, after all, what I do for a living) or saddened, even angered, by the criticism of lawyers. The more I thought about it, however, the more it occurred to me that Mr. Hilton likely has it wrong. The nostalgia about in-house lawyers disturbs because it posits a sort of Golden Age from which we have fallen. It suggests that the legal profession has become corrupt, more concerned about self-interest (or the self-interests of those they serve most immediately) than about the common good. It would be nice had it once been the case that in-house lawyers called questionable activities to the attention of the board and insisted it be changed. Perhaps it was. And it would be sad if lawyers no longer looked out for the public interest by calling their employers to account.

But the role of the corporate lawyer has long been to help a company stay within the letter of the law. As far back as the turn of the 20th century, Oliver Wendall Holmes spoke of lawyers employing a "bad man's" view of the law when advising clients: that is, they asked what the courts (or other quasi-judicial bodies) would do in fact, not what the spirit of the law might be. They asked the question a bad man would ask: what can I get away with? Holmes saw nothing wrong with this approach, which he saw as inevitable given the role lawyers play in our system. And Holmes was skeptical of any "more pretentious" sense of what is morally right or of how lawyers should act. When a client asks what the law says about whatever it is she wants to do, the answer must include information of what the relevant judicial bodies are likely to do. It would be dishonest to present a reading of the law that is stricter than the relevant court would give it, though nothing precludes the lawyer from also addressing the intentions or goals behind rules and regulations. In fact, those intentions and goals likely will influence how courts read those enactments -- unless, of course, the court is staffed by narrow-minded textualists or Scalian originalists, who have no truck with anything beyond the literal meanings of the words in the text. Lawyers are expected to be assiduously honest, and I think that means telling their clients the truth about the actual state of the law in practice rather than offering some pie-in-the-sky theory about what the terms of the law might mean were they read by some ideal judge in the heavenly city.

To be sure, a case can be made that the "bad man" style of lawyering is cynical and unethical (that's why it's called the "bad man" view). But that case is not very convincing. The job of the lawyer is primarily to serve her client (see the Rules of Professional Conduct), and only secondarily to ensure that some abstract notion of "justice" is achieved on any given occasion. Placing the client above abstract justice lies at the heart of the adversary system, and while arguments can be made against the adversary system as a system, those arguments must remain merely philosophical in the face of the fact that the people have done nothing to replace that system with something else. Lawyers are "officers of the court" and must perform their roles within the terms set by the system. The practice of the law, in that sense, is conservative because it assumes that the rules, customs, and traditions that have grown up over time are likely to better serve justice than random, individual, and non-traditional attempts to achieve justice on isolated occasions and outside the standing rules of practice. Such a vision of the law and legal practice strikes me as most consistent with the very idea of a constitutional democracy.

None of this should be read to deny that there are conceptions of justice built into the system that should guide courts and lawyers in deciding cases. There are such principles. But it is unlikely that in advising a client the lawyer's role is to wax philosophical about some of those principles and how they relate to the client's particular interests. The principles may become relevant now and then in court, in defense of the client who is charged with doing something. But that means that their place is in the deliberations of the lawyer heading to court, in the judge's chambers, and in the conference rooms of appellate courts -- not in the office of a client who is looking for advice as to how to behave on a particular occasion.

And so what has changed, I believe, is not the tendency of lawyers to help their clients do what they want to do within the bounds of the law, but what those bounds actually are. Where rules and regulations are interpreted in very broad and permissive terms, where they often go unenforced, it is incumbent upon the lawyer to tell her client the truth about these matters. To present a reading of the law that ignores these features of the material circumstances in which the client will act is dishonest and places a preoccupation with one's own purity above the interests of the client.

So not only is Hilton likely wrong about the way things used to be, but he is also wrong about how they ought to be. Certainly lawyers should tell their clients when they or their employees are doing something that violates the law as it will be read and enforced. But the next step is to help the client achieve her goals within the terms of the law; it is emphatically not to stubbornly dig in his heals and refuse to offer the advice the client seeks.

Hilton may even be wrong about the way things are now. I suspect there is just as much evidence (and just as little) for his claim about the role being played by communications people as there is for his claim about the failure of in-house (or external) counsel to be good watchdogs. How do we go about proving that lawyers are not, generally, warning their clients against actions that violate the law? It is quite possible that lawyers do this regularly, and that most clients take their advice to heart and act in socially acceptable ways. There is no way of knowing. Bald assertions about how bad lawyers have become only serve to pin the blame for large misdeeds on easy targets, thereby ridding corporate executives and the culture they have created -- not to mention the culture at large, created largely by a citizenry vastly more interested in material things than in civic virtue -- of the responsibility for the corruption that surrounds us. 

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