February 18, 2009

• recommended reading

  *from my friend banrockstation.  I had Gillers as a prof, and I regret now not engaging with him when I had the chance.

  Reproduced below and attached in Word format is the text of a talk given
  by NYU Law School Professor Stephen Gillers last Friday night at Central
  Synagogue's Jethro Shabbat dinner. Those present found it exceptionally
  interesting and provocative.
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  Is Law (Still) an Honorable Profession?
  Stephen Gillers
  When Ron Tabak e-mailed me about giving the Jethro talk this
  year, I was in Cambodia speaking about the American legal system to
  graduate law students at the Royal University of Law and Economics. That
  experience offered one further example of the intense interest globally
  in the rule of law in the United States. To my mind, the rule of law is
  America's best export. If we can instill in other nations our respect
  for the rule of law, an independent bar, and an independent judiciary,
  we will go along way toward the creation of democratic institutions
  worldwide.

  But our achievements in establishing a nation based on the rule
  of law should not be allowed to obscure problems with the work of
  lawyers here at home.

  When Ron and I agreed on the title of the talk, I was not yet clear on
  what I would say about honor and the legal profession although I had
  some vague ideas.

  Events this fall, however, have clarified what needs to be said.
  When talking of honor, one could hardly begin in a better place
  than the events surrounding the fall of Bernard Madoff. So I will. I
  will then move to the question posed in my title and conclude with
  references to the bible.

  What I find most remarkable about the Bernard Madoff story so
  far is that his sons turned him in. Bernard Madoff confessed to his sons
  and on the advice of counsel, they turned him in. And the whole business
  came crashing down.

  I don't question the legal advice or the sons' action. What
  puzzles me is something else. Why did no one do this sooner? Why did it
  take so long? Sooner or later, the fraud would be revealed. Tens of
  thousands of people would suffer. Those who invested would suffer.
  Charities dependent on donations from the investors would suffer. All
  those whom the charities helped would suffer. And the suffering would be
  great. Is great.

  Now, the incontrovertible fact is that it is impossible -
  impossible - to run a business like Madoff's in our highly regulated
  society without the help of professionals -accountants and lawyers - all
  along the way. Did none of them know? Did none have suspicions? Did they
  look the other way? We will in time, I hope, get answers to these
  questions. Unfortunately, they are not new questions. They are asked in
  the wake of all great frauds.

  Stanley Sporkin asked them after the S&L crisis of the 1980s. The
  government took control of failed banks, including Lincoln Savings &
  Loan. Charles Keating, CEO of Lincoln's parent, challenged the
  takeover. In rejecting the challenge, Judge Sporkin wrote this now
  famous passage:

  "Keating testified that he was so bent on doing the 'right
  thing' that he surrounded himself with literally scores of accountants
  and lawyers to make sure all the transactions were legal.

  "The questions that must be asked are:

  "Where were these professionals, a number of whom are now
  asserting their rights under the Fifth Amendment, when these clearly
  improper transactions were being consummated?

  "Why didn't any of them speak up or disassociate themselves from
  the transactions?

  "Where also were the outside accountants and attorneys when
  these transactions were effectuated?

  "What is difficult to understand is that with all the
  professional talent involved (both accounting and legal), why at least
  one professional would not have blown the whistle to stop the
  overreaching that took place in this case."

  Judge Sporkin's questions are no easier to answer today than when
  he asked them.

  We do know that lawyers and auditors for the failed banks paid tens of
  millions of dollars to settle civil claims based in part on their
  silence. Or their insurers did. Was the price of silence then merely a
  cost of doing business? A ledger entry? Nothing more?

  The New York courts did not heed Judge Sporkin's questions when in
  December they adopted new Rules of Professional Conduct for lawyers,
  effective April 1, 2009. In the current climate, you might expect that
  the courts would have made it a bit easier for lawyers to reveal client
  information to stop fraud or prevent great harm, especially if the
  lawyer discovers that he or she has unwittingly assisted the fraud.
  Following the corporate scandals of the last decade, the ABA Model Rules
  of Professional Conduct and rules in many states were changed to grant
  this authority. It is not a radical idea by any means. But not only did
  the New York courts not adopt these ABA provisions, the new rules they
  did adopt actually further limit a lawyer's duty to reveal fraud than
  exists today under New York's current rules. We're backsliding here in
  New York, the nation's financial capital.

  The title of this talk is "Is Law (Still) An Honorable
  Profession?" So I have to say what I mean by honor? It is more than
  acting lawfully. It is that, certainly, but it is more. It is also how
  you behave even when you can do as you please, especially then. Honor,
  at the least, means not exploiting the trust of vulnerable others for
  your own advantage - including strangers - who are relying on certain
  basic standards of human decency.

  Honor shares the stage with two other civilizing qualities. One is
  shame. To value honor is to be capable of shame. For the shameless,
  honor does not exist. They don't prize it and they don't miss it. The
  other quality is empathy even for those you do not know. Empathy is
  compassion for the plight of others, because you understand that they
  are tied to you and you to them.

  Honor, shame, and empathy, then, make up the glue of civilization.
  Without them, things will fall apart. And as bad: when the public sees a
  loss of honor in how institutions and professionals behave, we have a
  loss of trust. That is what we see happening now. Some examples:
  Reviewing Charles Morris's book, The Trillion Dollar Meltdown, in
  the New York Review, Jeff Madrick writes: "Morris makes it clear that it
  was an unquenchable thirst for easy profits that led commercial and
  investment banks in the US and around the world
  - as well as hedge fund, insurance companies, private equity firms, and
  other financial institutions - to take unjustifiable risks for their own
  gain, and in so doing jeopardize the future of the nation's credit
  system and the economy itself."

  George Packer, in a recent New Yorker, describes in wrenching
  detail the plight of some of the vulnerable victims of this behavior -
  blue collar people in southwest Florida who have lost their jobs and
  sometimes their homes. These are people largely invisible to the masters
  of the financial universe who produced the mess under which they now
  suffer.

  In the New York Times, Gretchen Morgenson's columns have shown
  that the credit-rating agencies gave ridiculously optimistic grades to
  mortgage backed bonds. The bond issuers paid the agencies' fees. The
  income from this part of the agencies' business was especially
  lucrative. Put two and two together: The inference is compelling.
  Elsewhere, health, not wealth, has been jeopardized. In January
  Eli Lilly agreed to pay $1.42 billion to settle a probe into alleged
  improper marketing of the antipsychotic drug Zyprexa. Gardiner Harris
  reports in the Times: "Among the charges, Lilly has been accused of a
  scheme stretching for years to persuade doctors to prescribe Zyprexa to
  two categories of patients - children and the elderly - for whom the
  drug was not federally approved and in whom its use was especially
  risky.... The company...pressed doctors to treat disruptive children
  with Zyprexa, court documents show, even though the medicine's tendency
  to cause severe weight gain and metabolic disorders is particularly
  pronounced in children.

  Over the last decade, Zyprexa's use in children has soared."
  And staying on health, Marcia Angell in the New York Review,
  Gardiner Harris in the Times, Senator Charles Grassley with subpoena
  power, and others have told of psychiatrists with economic interests in
  a drug, sometimes along with their universities, or who have received
  huge consulting sums from drug companies, then doing National Institute
  of Health studies on those very drugs or on drugs owned by the very
  companies that paid them so handsomely. Some universities did not
  enforce their conflict of interest rules. Some of this conduct also
  violates NIH conflict of interest rules.

  A particularly outrageous example of dishonorable behavior in my
  lifetime was Big Tobacco's decades long suppression of conclusive proof
  that tobacco kills, while all the while implying the contrary, including
  in ads targeting young people. I needn't ask Judge Sporkin's questions
  this time. We know where the lawyers were. Big Tobacco's success in
  hiding the science that showed that tobacco kills was accomplished with
  the highly creative help of clever lawyers who managed to bury the
  information by concocting a theory that the laboratory results were
  protected by the attorney-client privilege.

  Which takes me back to lawyers. As I say, in our regulated
  economy, lawyers are deeply embedded in all sophisticated commercial and
  financial transactions. So, often, in situations like those I've
  described and others, the conduct would not have been possible at all or
  for long without the assistance of lawyers. Or if not the assistance,
  than with the knowledge and acquiescence.

  Let me be clear: It is more than honorable to help clients
  achieve their goals under law. And it is more than honorable to be
  devoted to a client's goals. In a civilized society, it is necessary.
  Lawyers say, with justification, that it is not their job to judge the
  worthiness of the clients' goals, only if those goals are legal. A
  lawyer is but an advisor on the law, they say. The client calls the
  shots.

  And almost always, this is true. But it is not always true.
  Sometimes, this defense undermines the rule of law itself. Our popular
  model for the work of lawyers - the way lawyers are portrayed in popular
  culture - envisions a trial lawyer, usually a criminal defense lawyer,
  whose arguments can be challenged by an opposing lawyer and will be
  exposed to the ruling of a judge.

  This is a misleading model. Most American lawyers are not trial
  lawyers. They are counselors or advisers, operating where there is no
  judge and no adversary. No one is watching. And there may never be.
  Then, the temptation is to push the limits, sift the language of the
  law, find hidden meanings. Now, our social understanding is that law is
  not endlessly pliable in this way. But the problem is this: It can be
  made to be because law, after all, is only a language and language is
  pretty pliable. In the hands of a creative, motivated lawyer, with a
  demanding client, the language of the law can have astonishing
  elasticity. Through interpretation, the rule of law can be turned into
  what it is not. A fine exercise if you're interpreting Shakespeare or
  Kafka. But not for law.

  Our law cannot be defined solely by the limits of a lawyer's
  linguistic imagination.

  That is a recipe for destabilizing the rule of law, not preserving it.
  Are you shocked by the torture memos the Justice Department
  lawyers wrote during the Bush years, some of which were later disowned
  by the same Justice Department in the face of popular repulsion? So am
  I, especially after I had a chance to study them closely.

  They are worse than you think. They are dense, with hundreds of
  footnotes. This is no accident. They are dressed up to appear scholarly,
  erudite, learned. But they are junk law.

  The torture memos are but a far more egregious example of the
  kind of lawyer behavior I'm describing. Push the limits. Use your
  imagination. Who's looking? The client wants it.

  If the client is ever challenged, it has an excuse. The lawyers said it
  was okay. That is in fact what former federal officials now say. "We had
  a legal opinion."

  A lawyer who uses his or her legal education and skills to
  distort the law, to destroy the rule of law, because he or she is adept
  at manipulating language, when no judge, no adversary is watching, is as
  blameworthy as the client. You cannot hide behind your professional
  mask.

  What I have just said may seem unremarkable to nonlawyers. To
  many lawyers, it will sound like blasphemy, a rejection of the duty of
  loyalty to the client. My reply: Loyalty does require you to aid
  morally offensive goals, even if they are legal.

  Or lawyers may say, "but if I decline, someone else will do it.
  So what is gained?"

  My reply: "Let someone else do it. But not you. Honor is personal. Worry
  about yourself.

  You don't get a pass from moral responsibility because you acted for a
  client."

  That's the first lesson I would offer, aimed at lawyers. A
  second lesson, aimed at all, is this: Keep ready your capacity for
  outrage. This is very important. Next to the vote, outrage is the one
  response each of us can contribute. Outrage is how honor must confront
  dishonor. If we lose the capacity for outrage, we are in serious
  trouble.

  It is tempting to put outrage aside. There are other things to
  do every day: make play dates, plan dinner, read a novel, learn Italian,
  not to mention our jobs. Outrage takes energy. It is stressful. Today,
  the demand for it is seemingly endless.

  Nonetheless, outrage is a duty of citizenship. It's opposite is
  complacency, which will bring more reasons for outrage in a downward
  spiral.

  I'm a lawyer and law professor. For more than 30 years I've
  taught legal ethics. So maybe I can be forgiven for believing that honor
  among lawyers is the best hope for a civil society, especially in times
  like these when it can daily appear that those we believed were good
  people, good institutions private and public, good companies, seem to
  have lost their moral bearings, that we have a scarcity of honor and
  capacity for shame. If the bar loses honor and capacity for shame, what
  have we left?

  We have the clergy. Necessary but not sufficient.

  So here is my third lesson, again for lawyers: Do not become
  skilled facilitators of whatever legal goal a paying client may desire.
  That's not what you envisioned for yourself when you answered the
  question on your law school application: "Why do you want to study law?"
  Practice saying no. No has moral power. It can be liberating - for you
  and for your client.

  I would have hesitated to give this advice if I did not have
  eminent precedent.

  Elihu Root, Nobel Peace Prize laureate, Secretary of State under
  Theodore Roosevelt, said it better a century ago: "About half of the
  practice of a decent lawyer is telling would-be clients that they are
  damned fools and should stop."

  And more recent are the words of Thomas Shaffer, an emeritus
  professor at Notre Dame Law School. Professor Shaffer often writes about
  legal ethics and religious values.

  He gave a speech at Vermont Law School some ten years ago. It became an
  article in the school's law review. The title is Jews, Christians,
  Lawyers, and Money. It began:

  "Years ago, when I was the resident guru in legal ethics at Washington
  and Lee University, in the little mountain town of Lexington, Virginia,
  a reporter from the daily newspaper in Roanoke asked me to identify the
  most serious ethical issue for American lawyers.

  My answer: 'Money.'"

  And Shaffer continued with references that resonate today: "My
  purpose so far is to suggest to you that money is the number-one most
  serious moral problem for American lawyers and their clients. My moral
  observation is biblical: God destroyed the biblical cities of Sodom and
  Gomorrah in a rain of brimstone and fire. The Rabbis of the Mishnah
  wondered why. They did not decide, as many Christian preachers have
  decided, that God got upset because of the Sodomites' sexual
  irregularities. It wasn't sex. The reason for the destruction of Sodom
  was money."

  The Rabbis said the relevant text is in the Book of Leviticus.

  "Thy brother may live with thee." The wealthy Sodomites were not
  generous to one another; they did not take care of the poor.... Sodom
  was destroyed by God, in the view of the Jewish tradition, because
  "individual selfishness . . . had become an integral part of its
  communal culture."

  The book of Leviticus also says: "You shall not put a stumbling
  block in the path of the blind." The sages of Judaism decided that the
  rule does not apply to those who harass blind people as much as it
  applies to those who misuse the law, who are dishonest, but legal, who,
  "through perfectly legal transactions," mistreat vulnerable people....
  Let this be our lesson, too.

  • 9:10 pm
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