Business Law Prof Blog

New Year's Resolution for Lawyers

People rarely keep resolutions, much less ones they don’t make for themselves, but here are some you may want to try.

1. Post information about the law and current events that lay people can understand on social media. You don’t need to be a TikTok lawyer and dance around, but there’s so much misinformation out there by “influencers” that lawyers almost have a responsibility to correct the record.
2. Embrace legal tech. Change is scary for most lawyers, but we need to get with the times, and you can start off in areas such as legal research, case management, accounting, billing, document automation and storage, document management, E-discovery, practice management, legal chatbots, automaton of legal workflow, contract management, artificial intelligence, and cloud-based applications. Remember, lawyers have an ethical duty of technological competence.
3. Learn about legal issues related to the metaverse such as data privacy and IP challenges.
4. Do a data security audit and ensure you understand where your and your clients’ data is and how it’s being transmitted, stored, and destroyed. Lawyers have access to valuable confidential information and hackers know that. Lawyers also have ethical obligations to safeguard that information. Are you communicating with clients on WhatsApp or text messages? Do you have Siri or Alexa enabled when you’re talking about client matters? You may want to re-think that. Better yet, hire a white hat hacker to assess your vulnerabilities. I'll do a whole separate post on this because this is so critical. 
5. Speaking of data, get up to speed on data analytics. Your clients use data every day to optimize their business performance. Compliance professionals and in-house lawyers know that this is critical. All lawyers should as well.
6. Get involved with government affairs. Educate legislators, write comment letters, and publish op-ed pieces so that people making the laws and influencing lawmakers can get the benefit of your analytical skills. Just make sure you’re aware of the local, state, and federal lobbying laws.
7. Learn something completely new. When you do your CLE requirement, don’t just take courses in your area of expertise. Take a class that has nothing to do with what you do for a living. If you think that NFTs and cryptocurrency are part of a fad waiting to implode, take that course. You’ll either learn something new or prove yourself right.
8. Re-think how you work. What can you stop, start, and continue doing in your workplace and family life?
9. Be strategic when thinking about diversity, equity, and inclusion. Lawyers talk about it, but from what I observe in my lawyer coaching practice and the statistics, the reality is much different on the ground and efforts often backfire.
10. Prioritize your mental health and that of the members on your team. Do you need to look at billable hours requirements? What behavior does your bonus or promotion system incentivize? What else can you do to make sure that people are valued and continually learning? When was the last time you conducted an employee engagement survey and really listened to what you team members are saying? Whether your team is remote or hybrid, what can you do to make people believe they are part of a larger mission? There are so many resources out there. If you do nothing else on this list, please focus on this one. If you want help on how to start, send me an email.

Wishing you a safe, healthy, and happy 2022.

Where Were The Gatekeepers Pt 2- Social Media's Social Dilemma

Two weeks ago, I wrote about the role of compliance officers and general counsel working for Big Pharma in Where Were the Gatekeepers- Part 1. As a former compliance officer and deputy general counsel, I wondered how and if those in-house sentinels were raising alarm bells about safety concerns related to rushing a COVID-19 vaccine to the public. Now that I’ve watched the Netflix documentary “The Social Dilemma,” I’m wondering the same thing about the lawyers and compliance professionals working for the social media companies.

The documentary features some of the engineers and executives behind the massive success of Google, Facebook, Pinterest, Twitter, YouTube and other platforms. Tristan Harris, a former Google design ethicist, is the star of the documentary and the main whistleblower. He raised concerns to 60 Minutes in 2017 and millions have watched his TED Talk.  He also testified before Congress in 2019 about how social media companies use algorithms and artificial intelligence to manipulate behavior. Human rights organizations have accused social media platforms of facilitating human rights abuses. Facebook and others have paid billions in fines for privacy violations.  Advertisers boycotted over Facebook and hate speech. But nothing has slowed their growth.

The documentary explicitly links the rising rate of youth depression, suicide, and risk taking behavior to social media’s disproportionate influence. Most of my friends who have watched it have already decreased their screen time or at least have become more conscious of it. Maybe they are taking a cue from those who work for these companies but don’t allow their young children to have any screen time. Hmmm … 

I’ve watched the documentary twice. Here are some of the more memorable quotes:

”If you’re not paying for the product, then you’re the product.”

“They sell certainty that someone will see your advertisement.” 

“It’s not our data that’s being sold. They are building models to predict our actions based on the click, what emotions trigger you, what videos you will watch.” 

“Algorithms are opinions embedded in code.”

”It’s the gradual, slight, imperceptible change in our own behavior and perception that is the product.”

“Social media is a drug.”

”There are only two industries that call their customers ‘users’: illegal drugs and software.”

”Social media is a marketplace that trades exclusively in human futures.”

”The very meaning of culture is manipulation.”

“Social media isn’t a tool waiting to be used. It has its own goals, and it has its own means of pursuing them.”

“These services are killing people and causing people to kill themselves.”

“When you go to Google and type in “climate change is,” you will get a different result based on where you live … that’s a function of … the particular things Google knows about your interests.”

“It’s 2.7 billion Truman Show. Each person has their own reality, their own facts.” 

“It worries me that an algorithm I worked on is increasing polarization in society.”

“Fake news on Twitter spreads six times faster than real news.”

“People have no idea what is true and now it’s a matter of life and death.”

“Social media amplifies exponential gossip and exponential hearsay to the point that we don’t know what’s true no matter what issue we care about.”

“If you want to control the operation of a country, there’s never been a better tool than Facebook.”

"The Russians didn't hack Facebook. What they did was use the tools Facebook created for legitimate advertisers and legitimate users, and they applied it to a nefarious purpose." 

“What [am I] most worried about? In the short term horizon? Civil War.”

“How do you wake up from the matrix when you don’t know you’re in the matrix”?

“You could shut down the service and destroy . . . $20 billion in shareholder value and get sued, but you can’t in practice put the genie back in the model.”

“We need to accept that it’s ok for companies to be focused on making money but  it’s not ok when there’s no regulation, no rules, and no competition and companies are acting as de facto governments and then saying ‘we can regulate ourselves.’ “

“There’s no fiscal reason for these companies to change.”

This brings me back to the beginning of my post. We’ve heard from former investors, engineers, and algorithm magicians from these companies, but where were and are the gatekeepers? What were they doing to sound the alarm?  But maybe I’m asking the wrong question. As Ann Lipton’s provocative post on Doyle, Watson, and the Purpose of the Corporation notes, “Are you looking at things from outside the corporation, in terms of structuring our overall legal and societal institutions?  Or are you looking at things from inside the corporation, in terms of how corporate managers should understand their jobs and their own roles?”

If you’re a board member or C-Suite executive of a social media company, you have to ask yourself, what if hate speech, fake news, polarization, and addiction to your product are actually profitable? What if perpetuating rumors that maximize shareholder value is the right decision? Why would you change a business model that works for the shareholders even if it doesn’t work for the rest of society? If social media is like a drug, it’s up to parents to instill the right values in their children. I get it. But what about the lawyers and the people in charge of establishing, promoting, and maintaining an ethical culture? To be clear, I don’t mean in any way to impugn the integrity of lawyers and compliance professionals who work for social media companies. I have met several at business and human rights events and privacy conferences who take the power of the tech industry very seriously and advocate for change.

The social media companies have a dilemma. Compliance officers talk about “tone at the top,” “mood in the middle,” and the “buzz at the bottom.” Everyone in the organization has to believe in the ethical mandate as laid out and modeled by leadership. Indeed, CEOs typically sign off on warm, fuzzy statements about ethical behavior in the beginning of the Code of Conduct. I’ve drafted quite a few and looked at hundreds more.  Notably, Facebook’s Code of Conduct, updated just a few weeks ago, has no statement of principle from CEO Mark Zuckerberg and seems very lawyerlike. Perhaps there’s a more robust version that employees can access where Zuckerberg extols company values. Twitter’s code is slightly better and touches more on ethical culture. Google’s Code states, “Our products, features, and services should make Google more useful for all our users. We have many different types of users, from individuals to large businesses, but one guiding principle: “Is what we are offering useful?”’ My question is “useful” to whom? I use Google several times a day, but now I have to worry about what Google chooses to show me. What's my personal algorithm? I’ve been off of Facebook and Instagram since January 2020 and I have no plans to go back.

Fifty years ago, Milton Friedman uttered the famous statement, “There is one and only one social responsibility of business–to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” The social media companies have written the rules of the game. There is no competition. Now that the “Social Dilemma” is out, there really isn’t any more deception or fraud.

Do the social media companies actually have a social responsibility to do better? In 2012,  Facebook’s S-1 proclaimed that the company’s mission was to “make the world more open and connected.” Facebook’s current Sustainability Page claims that, “At Facebook, our mission is to give people the power to build community and bring the world closer together.” Why is it, then that in 2020, people seem more disconnected than ever even though they are tethered to their devices while awake and have them in reach while asleep? Facebook’s sustainability strategy appears to be centered around climate change and supply chain issues, important to be sure. But is it doing all that it can for the sustainability of society? Does it have to? I have no answer for that. All I can say is that you should watch the documentary and judge for yourself.

Best/Worst Depictions of M & A Deals on TV or At The Movies?

I wasn't one of those people who decided to become a lawyer after watching To Kill a Mockingbird, Witness for the Prosecution, and Twelve Angry Men, but they were some of my favorite movies. These movies and TV shows like Suits, How to Get Away with Murder, and Law & Order "teach" students and the general public that practicing law is sexy and/or confrontational. When I teach, I try to demystify and clear up some of the falsehoods, and that's easy with litigation-type courses. When I taught Business Associations, it was a bit tougher but we often used movies or TV shows to illustrate the right and wrong ways to do things. As an extra credit assignment, I asked students to write a critique of what the writers missed, misrepresented, or completely misunderstood.

This semester, I will be teaching a transactional drafting course where the students represent either the buyer or the seller of a small, privately owned business. I would like to recommend movies or TV shows that don't deal with multibillion dollar mergers, but I haven't been watching too much TV lately. I'm looking for suggestions along the lines of Silicon Valley (which past students have loved) or Billions. If you have any suggestions, please comment below or email me at [email protected].

 

 

 

Avengers Take Note: Hydra Is an LLC, But Not a Corporation

An Illinois appellate court decision that was just made available on Westlaw provides some revealing insight into Hydra, the longtime source of evil that many recognize from Captain America: The First Avenger. 

Hydra stated that Hydra's manager is Ahuva Horowitz, defendant's wife, and that she owns 100% of the membership interests of Hydra a limited liability corporation.

Xcel Supply LLC v. Horowitz, 2018 IL App (1st) 162986, ¶ 14, 100 N.E.3d 557, 561, reh'g denied (Mar. 9, 2018) (emphasis added). 

First, let's correct the record: Hydra is listed as an LLC, a limited liability company. It is not a corporation.  

Second, I should also note, after further review, it's not really THAT Hydra. It is apparently not this one:

In a prehuman time, a cabal of cold-blooded alien reptiles arrived on Earth, planning to start a legacy of evil. They planted the seed that would later gave birth to future evil empires. 

So, instead, the instant Hydra is Hydra Properties, LLC, which came into existence in 2009. That makes more sense, but it's a lot less interesting.  

Still, either way, and for either Hydra, if it's Hydra LLC, it's not a corporation.  

Need a break from grading? Watch Monsters Inc.

Every year my students have the opportunity to earn extra credit writing about business issues that they see in movies or television. This year the movies Wall Street, and The Social Network tied for the most popular subjects. One student wrote an interesting paper about the business and CSR issues in Monsters, Inc., a movie I plan to watch for the first time this weekend. Disney’s describes the movie this way:

Lovable Sulley and his wisecracking sidekick Mike Wazowski are the top scare team at Monsters, Inc., the scream-processing factory in Monstropolis. When a little girl named Boo wanders into their world, it's the monsters who are scared silly, and it's up to Sulley and Mike to keep her out of sight and get her back home.

The student who wrote the paper spent her time instead focusing on Mr. Waternoose, the villainous CEO, seen here.

Personally, I was hoping someone would write about Season 3 of HBO’s Silicon Valley, which has provided some great scenes about fiduciary duties, corporate governance, succession planning, funding, and other issues related to startups. No one did, but I was pleased to see so many students apply what they learned in class to what they have watched on screen. Some even indicated that they finally understood The Wolf of Wall Street now that they have taken the class. Let’s see if that understanding is reflected in their exams. Happy grading, everyone!

 

 

Best Binge-worthy Movies on Business

Every year, I offer my students the option of writing an extra credit paper on what Hollywood gets wrong about business. They can also apply what they've learned to a popular movie, television show, or book (the Godfather, Game of Thrones, and Sex and the City have provided some of the more interesting analogies). Often I provide a list of TV shows or movies that they can consider. Today, I’m asking my co-bloggers and our readers for their binge-worthy movie or TV choices. Some movie lists for business students are here, here, here, and here but I welcome your suggestions. For those of you who aren’t in my class and just want a break from the news, these lists may come in handy.

Poverty Inc. Discussion at NYU

Last fall, I posted some thoughts on the film Poverty Inc., which looked at the impact of foreign aid and business giving through programs like TOMS Shoes' One for One initiative. 

Recently, I came across this discussion on Poverty Inc. by Bill Easterly (NYU Economics) and the film's creators (Michael Matheson Miller and Mark Weber). I posted on one of Bill Easterly's books here. 

In the discussion at NYU, I especially liked this quote from Michael Matheson Miller: "We tend to treat poor people as objects--as objects of our charity, objects of our pity, objects of our compassion.--instead of subjects...Poor people are not objects; they are subjects and they should be the protagonists in their own stories of development." The personal story Mark Weber tells of his trip while he was studying at Notre Dame was moving, but you will have to watch the discussion to hear it, as it would be tough to summarize. Some of the audience questions are a bit long-winded, but I think the panel does a nice job deciphering and answering. 

The film's trailer, the discussion, and the Q&A with the audience are all worth watching.

Film Trailer

Discussion

Q&A 1

Q&A 2

Q&A 3

Q&A 4

Binging on Billions

Next week is our Spring Break and I plan to catch up on some television and movie watching. Many of my former business associations students have raved about the show Billions, described online as follows:

Wealth, influence and corruption collide in this drama set in New York. Shrewd U.S. Attorney Chuck Rhoades is embroiled in a high-stakes game of predator vs. prey with the ambitious hedge-fund king, Bobby Axelrod. To date, Rhoades has never lost an insider trading case -- he's 81-0 -- but when criminal evidence turns up against Axelrod, he proceeds cautiously in building the case against Axelrod, who employs Rhoades' wife, psychiatrist Wendy, as a performance coach for his company. Wendy, who has been in her position longer than Chuck has been in his, refuses to give up her career for her husband's legal crusade against Axelrod. Both men use their intelligence, power and influence to outmaneuver the other in this battle over billions.

Now that my students are watching it, I feel compelled to do so as well, and not just because Australian papers play up the copious amounts of money and sex depicted in the series. I’m glad that my students are watching any television show that deals with the financial industry but even more gratified that they are emailing me telling me that now they understand some of the concepts that they see in this show and others such as HBO’s Silicon Valley.

Are there any other television shows or movies I should catch up on during Spring Break in between grading, writing, and watching Suits (for my Civil Procedure students)? I like to keep up with what my students watch because I use some of the story lines for in class hypos and exam questions. I also ask students to write reflection papers applying what they have learned in class and analyzing what Hollywood got wrong. I look forward to your suggestions.

A Few Thoughts on “Poverty, Inc.”

This past Sunday afternoon, I attended a screening of the film Poverty, Inc.

The trailer is available here.

I share a few, somewhat disconnected, thoughts on Poverty, Inc. under the page break.

Continue reading

Tips for Those Who Know Almost Nothing About Business (aka some of my incoming students)

It's barely July and I have received a surprising number of emails from my incoming business association students about how they can learn more about business before class starts. To provide some context, I have about 70 students registered and most will go on to work for small firms and/or government. BA is required at my school. Very few of my graduates will work for BigLaw, although I have some interning at the SEC. I always do a survey monkey before the semester starts, which gives me an idea of how many students are "terrified" of the idea of business or numbers and how many have any actual experience in the field so my tips are geared to my specific student base. I also focus my class on the kinds of issues that I believe they may face after graduation dealing with small businesses and entrepreneurs and not solely on the bar tested subjects. After I admonished the students to ignore my email and to relax at the beach during the summer, I sent the following tips:

If you know absolutely NOTHING about business or you want to learn a little more, try some of the following tips to get more comfortable with the language of business:

1) Watch CNBC, Bloomberg Business, or Fox Business. Some shows are better than others. Once we get into publicly traded companies, we will start watching clips from CNBC at the beginning of every class in the "BA in the News" section. You will start to see how the vocabulary we are learning is used in real life.

2) Read/skim the Wall Street Journal, NY Times Business Section or Daily Business Review. You can also read the business section of the Miami Herald but the others are better. If you plan to stay local, the DBR is key, especially the law and real estate sections.

3) Subscribe to the Investopedia word of the day- it's free. You can also download the free app.

4) Watch Shark Tank or The Profit (both are a little unrealistic but helpful for when we talk about profit & loss, cash flow statement etc). The show American Greed won't teach you a lot about what we will deal with in BA but if you're going to work for the SEC, DOJ or be a defense lawyer dealing with securities fraud you will see these kinds of cases.

5) Listen to the first or second season of The Start Up podcast available on ITunes.

6) Watch Silicon Valley on HBO- it provides a view of the world of  re venture capitalists and funding rounds for start ups.

7) Read anything by Michael Lewis related to business.

8) Watch anything on 60 Minutes or PBS' Frontline related to the financial crisis. We will not have a lot of time to cover the crisis but you need to know what led up to Sarbanes-Oxley and Dodd-Frank.

9 Watch the Oscar-winning documentary "Inside Job," which  is available on Netflix.

10) Listen to Planet Money on NPR on the weekends.

11) Listen to Marketplace on NPR (it's on weekday evenings around 6 pm).

12) Read Inc, Entrepreneur, or Fast Company magazines. 

13) Follow certain companies that you care about (or hate) or government agencies on Twitter. Key agencies include the IRS, SEC, DOJ, FCC, FTC etc. If you have certain passions such as social enterprise try #socent; for corporate social responsibility try #csr, for human rights and business try #bizhumanrights. For entrepreneurs try #startups. 

14) Join LinkedIn and find groups related to companies or business areas that interest you and monitor the discussions so you can keep current. Do the same with blogs. 

As I have blogged before, I also send them selected YouTube videos and suggest CALI lessons throughout the year. Any other tips that I should suggest? I look forward to hearing from you in the comments section or at [email protected].

How well does the media portray business?

In each of the classes I have taught I have offered extra credit for a reflection paper on how the media portrays the particular subject because most Americans, including law students, form their opinions about legal issues from television and the movies. Sometimes the media does a great job. I’m told by my friends who teach and practice criminal law that The Wire gets it right. Although I have never practiced criminal law, I assume that ABC’s How to Get Away With Murder, in which first-year students skip their other classes to both solve and commit murders, is probably less accurate. I do have some students who now watch CNBC because I show relevant clips in class. After a particularly heated on-air debate, one student called the network “the ESPN for business people.”

I’m looking for new fiction movies or TV shows to suggest to my students next semester. In addition to the standard business movies and documentaries, what makes your list of high-quality business-related shows? Friends, colleagues, and students have suggested the following traditional and nontraditional must-sees: 

1)   Game of Thrones (one student wrote about it in the partnership context)

2)   House of Cards (not purely business, but shows how business and politics intersect)

3)   House of Lies (a look at the world of management consulting)

4)   Silicon Valley (one episode I saw talked about entity selection)

5)   The Newsroom (during the last season writers tackled insider trading, hostile takeovers, and white knights)

6)   Sons of Anarchy (I don’t watch this one so I can’t judge)

7)   Shark Tank (not always a complete or accurate depiction but entertaining)

I look forward to your suggestions and to some binge-watching over the holidays.

Education and Aesthetics

Earlier this week, I watched Ivory Tower: Is College Worth the Cost? on CNN, which was a somewhat depressing documentary for someone who hopes to spend the next 30+ years in higher education.

One of the things the documentary decries is the construction of more and more extravagant buildings and amenities on college campuses.

While the extent and type of building that should occur can be reasonably debated – and my own institution has almost doubled the number of buildings on campus in the past decade – I want to make a relatively modest claim here: aesthetics matter in higher education.

(Photo of a Belmont University building and fountain from my iPhone).

Perhaps some schools have gone overboard in creating beautiful campuses. However, at institutions that exist to illuminate for students something much more important than mere financial returns, I think it is fitting to invest in beautiful campuses, for their own sake.

Again, perhaps most schools do not need student recreation centers than costs hundreds of millions of dollars, but there is something inspiring about going to a school, and teaching at a school, that is breathtakingly beautiful. 

This post may surprise some people who know me because I tend to be a pretty practical person, and I still believe that campus buildings should be functional over fancy, if you have to choose. But I think we need to widen the lens when we look at the benefits college and graduate school experiences provide. Yes, the financial benefits are quite important, and most schools need to be actively looking at increasing the financial benefits and/or reducing the financial costs.

Hopefully, however, college is about much more than just paying money now for an opportunity to earn more money later. Hopefully, college is about building relationships, learning independence, learning to think critically, being inspired, being mentored, creating and appreciating beauty. Maybe this is wishful thinking from a professor, but I do regularly see students who seem to capture much more from college than just better job prospects. Granted, many students do not take full advantage of the meaningful opportunities available, but those meaningful opportunities exist and they are hard to capture on a balance sheet.

I don’t know what a beautiful building is worth. I guess we could measure its worth by counting the number of additional students it attracts to the school, but that seems cynical and narrow. Beautiful buildings may inspire. Inspiration is tough to quantify, but, nonetheless, I think it has value. Personally, I am thankful I work on a beautiful campus, and hope the campus inspires our students not only while they study here, but after they leave as well.     

Commencement Speakers and The Giver

Much has been written about the protests at various schools over proposed commencement speakers.  I am not sure I have much original to add to the many thoughts that have been shared on the issue (See, e.g., Jonathan Adler (Case Western), The Volokh Conspiracy; Stephen Carter (Yale), Bloomberg; Glenn Harlan Reynolds (Tennessee), USA Today; Editorial Board, Washington Post), but the controversy did make me think of the dystopian society in The Giver where “Sameness” rules.

One of my younger sisters recently accepted a job with Walden Media, which is producing the upcoming film version of The Giver with The Weinstein Company (shameless plug - in theatres August 15, 2014).  My sister was amazed that I hadn’t read The Giver, as it is supposedly regular middle school reading, but it looks like the book (published in 1993) was not in the curriculum in time for me.  Yes, I feel older every day. 

Anyway, in a single day a few weeks ago, I read a borrowed copy of The Giver, which was a nice break from legal treatises and law review articles.  While I understand the “Elders” in The Giver were trying to protect people by ridding the community of differences, pain, conflict, and ridicule, it made for a shallow existence. 

Some of my most valuable moments in school occurred when I faced views I disagreed with and had to grapple with them.  As a professor, the most valuable conversations are often those with knowledgeable people with opposing opinions and ideas.  Going forward, I hope we will encourage engagement with those who see things differently than we do and continue the search for a more nuanced understanding of complex issues.

Crime and Punishment: Prosecuting Executives and Forcing Companies to Admit Guilt

 

“Man grows used to everything, the scoundrel!” 
― Fyodor Dostoyevsky, Crime and Punishment

This week two articles caught my eye.  The New York Times’ Room for Debate feature presented conflicting views on the need to “prosecute executives for Wall Street crime.” My former colleague at UMKC Law School, Bill Black, has been a vocal critic of the Obama administration’s failure to prosecute executives for their actions during the most recent financial crisis, and recommended bolstering regulators to build cases that they can win. Professor Ellen Podgor argued that the laws have overcriminalized behavior in a business context, and that the “line between criminal activities and acceptable business judgments can be fuzzy.” She cited the thousands of criminal statutes and regulations and compared them to what she deems to be overbroad statutes such as RICO, mail and wire fraud, and penalties for making false statements. She worried about the potential for prosecutors to abuse their powers when individuals may not understand when they are breaking the law.

Charles Ferguson, director of the film “Inside Job,” likened the activity of some major financial executives to that of mobsters and argued that they have actually done more damage to the economy. He questioned why the government hadn’t used RICO to pursue more criminal cases.  Former prosecutor and now private lawyer Allen Goelman pointed out rather bluntly that prosecutors aren’t cozy with Wall Street—they just won’t bring a case when the evidence won’t allow them to win. He also reminded us that greed and stupidity, which he claimed was the cause of the “overwhelming majority of the risky and irresponsible behavior by Wall Street,” are not crimes.  Professor Lawrence Friedman wrote that  the law “announces the community’s conceptions of right and wrong,” and if we now treat corporations like people under Citizens United then we should likewise make the executives who run them the objects of the community’s condemnation of wrongdoing.

Finally, Senator Elizabeth Warren concluded that if corporations know that they can break the law, pay a large settlement, and not admit any guilt or have any individual prosecuted, they won’t have any incentive to follow the law. She also argued for public disclosure of these settlements including whether there were tax deductions or releases of liability.

This brings me to the second interesting article. Former SEC enforcement chief and now Kirkland & Ellis partner Robert Khuzami recently said, “I didn’t think there was much doubt in most cases that a defendant engaged in wrongdoing when you had a 20-page complaint, you had them writing a big check, you may well have prosecuted an individual in the wrongdoing.” While not endorsing or rejecting current SEC Chair Mary Jo White’s position to require certain companies to admit wrongdoing in settlements, he raised a concern about whether this change in policy would place undue strain on the agency’s limited resources by forcing more cases to go to trial.  He also raised a valid point about the legitimate fear that firms should have in that admitting guilt could expose them to lawsuits, criminal prosecution, and potential business losses.  Chair White did not set out specific guidelines for the new protocol, but so far this year 22 companies have benefitted from the no admit/no deny policy and have paid $14 million in sanctions. But we don’t know how many executives from these companies lost their jobs. On the other hand, would these same companies have settled if they had to admit liability or would they have demanded their day in court?

Should the desire to preserve agency resources trump the need to protect the investing public—the stated purpose of the SEC? If neither the company nor the executive faces true accountability, what will be the incentive to change? In a post-Citizens United world, will Congressmen strengthen the laws or bolster the power and resources of the regulators to go after the corporations that help fund their campaigns? Have we, as Dostoyevsky asserted, become “used” to the current state of affairs where drug dealers and murderers go to jail, but there aren’t enough resources to pursue financial miscreants?

What will make companies and executives “do the right thing”? Dostoyevksy also wrote “intelligence alone is not nearly enough when it comes to acting wisely,” and he was right. Perhaps the fear of the punishment for clearly enumerated and understood crimes, and the fear of the admission of wrongdoing with the attendant collateral damage that causes will lead to a change in individual and corporate behavior.  I agree with Professor Podgor that there is clearly room for prosecutorial abuse of power and that the myriad of laws can lead to a no-mans land for the unwary executive forced to increase margins and earnings per share (while possibly getting a healthy bonus).  While I have argued in the past for an affirmative defense for certain kinds of corporate crimial liability, I also agree with Professor Black and Senator Warren.  At some point, people and the corporations (made up of people) need more than “intelligence” to act “wisely.” They need the punishment to fit the crime.