Select Page

This short essay addresses a topic important to both corporate governance and, perhaps more importantly, vital to the satisfaction that we lawyers can draw from our professional lives:  our conception of the duties of a lawyer when she engages in advising and assisting corporate clients.  While the topic is a bit abstract, it has large practical implications.

For more than two years newspapers and television news programs have been rich in stories about corporate abuse, about repeated failures in our system of corporate governance, and, more positively, about attempts to improve the quality of controls that we deploy to assure that business corporations operate responsibly within the law.  Financial scandals are, of course, a more or less permanent feature of our market economy.  They wax and wane, fed by cycles of manic enthusiasm and suppressed by periods of listless stock prices. But while financial fraud is neither new nor surprising, the U.S. public was nevertheless deeply shocked by the sudden implosion of Enron Corporation and the unmasking of massive fraud at WorldCom.  These were not only huge and important companies; they were taken to be prototypes of modern business enterprise.  Each company was a growth-oriented innovator.  Each company had spectacular success and was closely monitored, if not lionized, by Wall Street and the financial press.  But the journalists and financial analysts had it all wrong. In fact, these firms were paragons of deception.  The scale of the deceptions and the breadth of the individuals who seemed complicit in them— from corporate directors to auditors, from bankers and analysts to lawyers— was very alarming.  To many, these shocking events looked uncomfortably like systemic failure of one of the core legal institutions of our capitalist economy. . . .

For more information about Professor Allen’s Donahue Lecture (which served as the basis for this article) please click here.