Leo Strine on Practicing Law in a Lawless Time

Corporate lawyers now know that under the Trump administration it is likely that their major corporate clients will not be criminally charged for such serious crimes such violating laws governing foreign bribery, pollution and consumer protection. 

So what’s a corporate lawyer to do?

Leo Strine has some ideas.

Strine was the Chief Justice of the Delaware Supreme Court from 2014 to 2019 and is currently of counsel at Wactell, Lipton Rosen & Katz and a Fellow at the University of Pennsylvania Carey Law School.

Last month, Strine delivered the  David S. Ruder Lecture at the Securities Regulation Institute in Coronado, California.

The title of the lecture – Practicing Law in Lawless Time.

“The threat right now is not limited to criminal law, to antitrust law, or to labor law,” Strine said. “It also extends to consumer protection laws, environmental laws, human rights law, and laws designed to ensure public integrity and responsible business conduct.  All the laws designed to secure our ability to thrive safely as free citizens of an American republic may now be perversely misused.”

“It is thus a moment where clients may begin to ask questions like these: Why should we worry about complying with the law as written when those charged with enforcing it have said they won’t?  If we bring in [insert family member of an elected official] as a co-investor, can we tilt the regulatory process in our direction?  Should we remind the proxy advisory firms that someone associated with our proposed transaction is close to [the administration of an elected official] and that its displeasure with them would grow if they recommended against our deal?” 

“Wouldn’t financing the transaction in part with a stable coin from a company affiliated with an elected official also be helpful in creating the right regulatory context for approval?  Why is an antitrust agency asking us about our commitment to not discriminate against Black people, women, and others who have suffered de jure and de facto legal discrimination, and if we drop that commitment will it secure approval of our deal?  The [pick your favorite environmental statutes] require that we do the following things in siting, designing, constructing, and operating this new facility, but compliance has costs and why shouldn’t we just proceed without doing so because everyone knows that these laws are not being enforced?”

Strine says that corporate lawyers are now faced with troubling questions, like these:

“We would have taken on this pro bono matter any other time, but if we do it right now, will government power target us for taking on a cause disfavored by [pick your elected official]?  Should we allow our partners to sign on to amicus briefs in their personal capacity given the similar potential for blowback?  Our client is asking us to do something uncomfortable and not consistent with our prior view on the law, but aren’t all of our competitors in the same situation, and if we don’t do it, will we lose business to them?”  

“To what extent can we blind ourselves to concerning conduct by our client – such as what appears to be purposeful inducements to affiliates of key elected officials – designed to secure favorable governmental treatment, but for non-merit reasons, so long as we do not directly involve ourselves in it?  If there is public disclosure of the fact that these affiliates were involved and on what basis, are we comfortable crafting an SEC filing that leaves out the controversial ‘why’ they were involved because that ‘why’ is arguably ‘immaterial’?”

Strine traces the two competing conceptions of the role of lawyers in society, and argues that the sound one is the most traditional – one emphasizing the special duty of lawyers to counsel clients toward full respect for not just the letter, but the obvious spirit, of the law.

“The traditional lawyer-citizen model is comparatively high-minded and takes the view that the position of a lawyer as a member of a profession with special privileges comes with a corresponding duty to honor the system of law itself, and not simply to use cunning and legal acumen to advance any interest of a client.” 

“This traditional view can be fairly juxtaposed with the idea of the lawyer as not just a client’s counseling, negotiating, and litigating advocate, but a ‘zealous’ one, a view that might be called the ‘zealous advocate model.’

This zealous advocate model “sees lawyers as just a specific version of any other kind of professional for hire.  Although the lawyer cannot help a client with a course of action that would constitute a crime or fraud, some view it as okay, or at least no breach of professional conduct rules, for a lawyer to help a client that engages in illegal action that does not fit in these more serious categories.”

“Lawyers have special privileges that rest on our acceptance of unique responsibilities to the rule of law,” Strine says. “And that is especially true for the corporate lawyers given the reality that the stakes for society and the future of humanity if corporations with vast impact act in a lawless manner are in fact existential. For that reason, it is important that corporate lawyers and top corporate leaders stand their ground on a basic non-partisan proposition – we are a nation under law and the law should apply to everyone in an equal, non-discriminatory manner.”

Toward that basic objective for citizens of a republican democracy, the lecture identifies forensic indicators for lawyers that will help them and their clients recognize when the current moment might be causing a slide into legal, ethical and moral quicksand.  

The lecture then discusses the pragmatic and high-minded reasons why business lawyers and their corporate clients are best served by honoring the letter and spirit of the law in this perilous moment, regardless of whether those charged with enforcing the law are doing so with fidelity.

For his fellow corporate lawyers, Strine raises some yellow flags “that might suggest you proceed with even greater professional caution.”  

“The first could not be more relevant now and is an excellent starting point when being asked to advise about conduct that seems out of keeping with legal and commercial tradition and is inspired by however you would characterize the current moment,” he says.  

“Consider this scary if you perceive it – would the conduct have been considered illegal or improper under any administration of any party during the past two generations?  That is, under a bipartisan consensus view of the law, would the conduct have been considered illegal or improper?”  

“If so, is it only being considered now because of the perception that those currently entrusted with enforcing the law are not doing so, or will not do so against your particular client?” 

“The second involves a traditional tell of improper behavior:  does the proposed conduct involve the concealment of information, precisely because if that information would be disclosed, it would be considered controversial or potentially material to a regulator, a court, a stakeholder group with a legitimate interest in the matter, or the public?” 

“The third is a mirror test:  is the conduct of a kind that you or even the client itself has in the past successfully argued was illegal or improper when engaged in 29 by an adversary?  Do you and your law firm have a long-standing track record of believing that the proposed conduct was contrary to law and accepted commercial norms?  And, if so, do you have a good-faith and reasonable basis for the change in your view of the law?” 

“The fourth is another variant on the same theme:  One of the longest traditions in philosophical thinking about ethical behavior involves considering whether you are willing to apply a principle to yourself and not just to others when the principle advantages you.  This tradition includes Jesus, Hillel, Kant, Rawls and many others.”  

“So, ask, if the conduct your client is proposing to engage in were being done by the other side of a contested transaction, or was the product of counseling by a competitor law firm, what would you think of it?  If you would find an adversary doing it objectionable and wrongful, especially if it disadvantaged your client, or flouted the public interest, think on the implications of that reality.” 

“The fifth involves quizzical behavior such as the inclusion of co-investors, the provision of economic or other benefits to certain people, or the hiring of particular advisors, for reasons that have nothing to do with your client’s need for their capital, their business talent, or their merits-based expertise, but simply because doing so would help the client obtain an advantage in obtaining government approval or support for a legally impermissible reason.  If the obvious why is that something of personal benefit has been given to affiliates of those in power to ease the procurement of government action that should only be taken in compliance with law and for the benefit of the public, well. . .”

“Finally, there is a catch-all.  The reality is that corporate and securities lawyers typically do not lightly consider whether their clients are crossing a legal, ethical, or moral line.  Doubts are resolved in the large main strongly in favor of the client’s good faith and in making legal arguments, even if involving some risk, on their behalf, if there is some reasoned, principled basis for doing so.”

“Precisely because corporate and securities lawyers may be thought by the public at large as a bit too trusting of and all too willing to help clients skirt the law and, also, because our incentives to please clients are considerable, you are well advised to listen when your guts are made queasy by proposed action or you come out of a meeting feeling like you want to take a shower.”  

“That usually means that your body is reminding you that your brain knows that something is happening that you do not feel proud to be a part of and for sound reasons. Thinking of this kind – and I am sure you have your own approaches to assess difficult situations – helps you give your clients advice that is the most sound, limit the potential that they will later regret their actions, and channel their behavior toward lawful, high-integrity means for achieving their legitimate objectives.  As important, it will help you retain your moral compass and give your clients the best chance to preserve theirs.”  

“When you help a corporate client facing strong temptation to do the wrong thing in a high-stakes context find a way forward that is not only advantageous for the company but consistent with society’s legitimate expectation, you do both your client and society a genuine service.”

The lecture concludes on a note of optimism and with a belief in confidence in the legal profession.  

“No human being is perfect,” Strine says. “None of us will always be able to discern what is the right thing to do nor always have the courage to do it.  Certainly not me.”

“That lack of perfection is also true of the corporate and securities bar.  But the fact that corporate legal advisors are human and prone to lapses does not mean that lapses are the rule.  They are the rare exception we should not allow to become more common, by the atrophy that will come from a failure to exercise our moral muscle in this moment.”

“And that is the more assuring reality I wish to stress – corporate and securities lawyers counsel clients on a daily basis to comply with the law, to avoid edgy law-skirting tactics, and listen to the better angels of their nature.  The unfair conflict transactions that don’t happen, the initial, materially incomplete or misleading disclosure drafts that get corrected to include the material facts in proper context, and the product, workplace, or environmental safety shortcuts that are not taken don’t end up causing harm and thus don’t end up in the newspapers.”  

“The corporate bar, both outside and within corporations, helps clients pursue profitable strategies by law-abiding, ethical means and, as important, helps clients shape corporate cultures that embed expectations to respect stakeholders like consumers, communities of operations, and workers, and the laws of society.”

“So, during this unprecedented, and hopefully fleeting moment, corporate legal advisors are acting as important safeguards for the rule of law. And the facts that are uniquely difficult and unsavory pressures resulting from official departures from the principled adherence to the rule of law do not mean that the corporate and securities bar supports those departures nor that it is lightly bending to those pressures.”

“But because those pressures are not just unprecedented, but strong, it is critical that our profession acknowledge them openly and resolve to live up to our best traditions together. If we all do our best and behave in a law-respecting way in our work, it is more likely that corporate clients themselves will be under less pressure to stray from accepted legal and ethical norms.  By collectively doing the right thing, we can perform a genuine public service and do our part to continue the tradition that corporations compete within the bounds of society’s rules and thus that their pursuit of profit increases the welfare of our society as a whole.  Real economic growth occurs through innovation that creates better products and services, not through socially harmful externalities or concessions granted from elected officials and regulators for improper reasons, such as often happens in nations like Russia.”

“We are not Russia. We are way better than that. We are way stronger than that. We are the United States of America. A nation that competes on quality.  A nation whose best attribute is a creedal commitment to the principled rule of law.  A commitment that recognizes and celebrates the equality of each person before the law and where no person, regardless of office, is above the law.”

“Corporations have been made citizens of this nation under law on the explicit condition that they only do lawful business by lawful means. The law remains the law. No momentary officeholders can take that away from us.  Because the law remains the law, so, therefore, does the duty of corporations to obey it.”

“Those of us privileged to be their lawyers are uniquely positioned to make sure that American corporations honor their charters to society.  Those of us privileged to be their lawyers are uniquely positioned to help our nation’s best traditions and fundamental premise survive this dangerous moment.”

“Let’s resolve as siblings at the bar to make this another proud moment for a proud tradition associated with much of what is most admirable about our nation – that of the citizen-lawyer. Corporate and securities lawyers have less at risk than the many members of our profession who are being counted, at great personal cost, when it most matters.  Let’s honor them, the oaths to the rule of law and our nation that we freely took, the duty we owe to our children, and the call of our consciences.  Let’s try to do our best when our nation most needs our best.”