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| Accountability Accountable:
adj. 1: Subject to giving an account: ANSWERABLE.
2: Capable of being
accounted for: EXPLAINABLE. We are all accountable.
We are accountable to a Supreme Being (if we are believers),
to our families, and to our employers (or clients, as the case may
be). We are accountable to our government (and reminded
of that every April 15), to the electorate (if we are elected public
officials) and to each other (civilly and criminally). This accountability may be based on oath (marriage
vows, the lawyer’s oath) or status (employee, citizens). We are taught early on that with privilege comes
responsibility; with conduct (or misconduct), comes consequences. Nationwide, a number of our institutions are under
fire for their lack of accountability and their failure to self-regulate. From the accounting industry, to the large brokerage
firms, to the Catholic Church, and yes, to the legal community, we
have seen a mindset that leaves many of us shocked and disheartened. The troubles in the business community are “the
result of two decades of erosion of business ethics.”1 Fraud, greed, and malfeasance have always been
with us but seldom on this scale, or so it seems. When the aim of the accounting profession has
been, in the words of a former sec chairman, “to weaken federal oversight,
block proposed reform, and overpower the federal regulators who stood
in their way” and when Congress is complicit with those aims due in
part to “enormous” campaign contributions, what is the public to think? “It used to be that if industries had a problem
they would try to work it out with the regulatory authorities . .
. now they bypass the regulators completely and go right to Congress.”2 Some would suggest that the accounting firms
were merely serving clients “who became much more aggressive, demanding
that accountants sign off on results that supported frothy stock prices.”3 Yet as the accountants attested to those audits,
they apparently did not consider who would be held accountable for
the mess once it was uncovered. Speaking of frothy stock prices, what is the public
to think when major Wall Street firms appear to have “purposely misled
small investors with overly optimistic research in companies that
were also clients of their investment banking departments”?4
One can almost hear the firms blaming overly aggressive clients
and, after all, the firms wanted to keep the investment banking business,
and in order to do that they may have exaggerated a bit. Hubris and greed were allowed to flourish, conflicts
of interest were ignored, and little thought was given to the likelihood
that those in charge would one day be held accountable. Were lawyers involved in the accounting scandals? We know they were. Were lawyers involved in the Wall Street firms’
investment banking/research conflicts?
Most likely. Did the
Catholic Church receive advice from lawyers concerning coverups
of abuse? Again, somewhere,
at some time, almost certainly. Accountability for Lawyers How should a lawyer respond when she uncovers
evidence of fraud or wrongdoing by an organization as client? Are we in the legal community any better at
accountability than other institutions now under fire? In times past, a number of major law firms paid
out huge sums of money to the federal government for, in the government’s
eyes, helping “further fraudulent conduct by savings and loans.” The result was that some lawyers believed the
government was “requiring attorneys to serve as client watchdogs and
even, at times, as corporate snitches.”5
There have been other instances as well when lawyers would
argue that they were merely avoiding whistleblowing
on their client, rather than engaging in a conspiracy to commit fraud. Some observers have used recent events (the failure
of lawyers to pursue red flags during the Enron collapse) to suggest
the framework of Rule 1.13, the rule governing the organization as
client, should be amended. Currently
the rule suggests that a lawyer representing an organization who uncovers
apparent wrongdoing should “proceed as is reasonably necessary in
the best interest of the organization.”
One observer believes the rule should more specifically require,
rather than suggest, that the lawyer has an obligation to pursue the
matter all the way to the top of the organization.6
Without a clear directive, it seems likely that some will not
act when they should (undoubtedly, some will not act even with a clear
directive, out of fear). A partner in a major firm, when confronted with
a memo issued by her firm related to the Enron mess, which warned
the client that what they were doing was illegal, but which was not
followed up by the firm, later suggested “‘good lawyers’ tell their
clients about vulnerabilities” and let the clients “incorporate the
risk into their decision making.”7
Since when is breaking the law a mere “vulnerability”?
See no evil, hear no evil . . . . I would suggest a good lawyer would wait for a
response to her memo and, failing to receive one, pursue the matter
as far in the organization as necessary, resigning in accordance with
Rule 1.16 if, despite her efforts, a continuing violation of the law
appears likely. In recommending this course of action, I do
not underestimate the amount of courage required to raise the issue
and follow through to the point of resignation.
A lawyer in this situation must consider the long-term consequences
of failing to act. Remaining
quiet may be attractive short-term, but devastating long-term, both
to the organization and to the career of the attorney.
If and when the matter comes to light, the lawyer will be held
accountable. In the end I suppose it depends on how you define
a “good” lawyer. The partners’
assessment of what constitutes a good lawyer sounds suspiciously similar
to what constitutes a coconspirator, at least in the eyes of some
prosecutors. Perhaps the problem is, as another observer
has noted, that lawyers reviewing corporate transactions “rationalize
ways to not ‘know’ that something runs afoul of the law. Their mindset . . . is, ‘Can I think of a way
a court might not find it illegal?’”8
Character seldom collapses overnight; it erodes over time as
the compromising of principles becomes easier and easier. Conclusion The public expects and deserves accountability
from the businesses, professions, and other institutions that govern
American life. We in the legal profession are not immune from
this expectation. As the definition
that began this article suggests, we as lawyers are answerable,
both to our clients in the regular course of business, and to the
public when our services are used in furtherance of a fraud.
We also should be prepared to explain our behavior,
whether to our coworkers, our families, or a grand jury.
Too often, those in power behave arrogantly and take the path
of least resistance, only to create conditions that make inevitable
a horrendous day of reckoning. The legal profession, never tremendously popular
with the public in the best of times, shares in this erosion of credibility
that is undermining the public’s faith in those forces that influence
their daily lives. Each business,
profession, and institution must have effective leadership who ensure
that their members are held accountable and who respond to public
concerns with action. In the
meantime, each of us as lawyers should consider what it means to be
a “good” - and accountable - lawyer. Notes 2. Mayer, ibid., quoting Arthur Levitt,
Jr., chairman of the Securities and Exchange Commission in the Clinton
Administration. 3. Jonathan D. Glater,
“Lone Ranger of Auditors Fell Slowly Out of Saddle,” The 4. Charles Gasparino
and Randall Smith, “Merrill Lynch Is Proposing a Framework for Settlement,”
The Wall Street Journal, 5. Michael Orey and
Richard B. Schmitt, “Enron Entangles Lawyers,” The Wall Street
Journal, 6. Orey and Schmitt,
ibid., quoting Professor Richard Painter from the University of Illinois
Law School. 7. Orey and Schmitt,
ibid., quoting a partner from Brobeck,
Phleger & Harrison, a 8. Michael Orey,
“Launching Broadsides at the Bar,” The Wall Street Journal,
EDWARD J. CLEARY is director of the Office
of Lawyers’ Professional Responsibility.
He has practiced both privately and as a public defender for
20 years and is past president of the Ramsey County Bar Association.
His book, Beyond the Burning Cross, won a national award in
1996. |
