In my last posting, Part I of this series, I left off asserting that there are enormous psychological pressures for lawyers, in particular, “in-house” or “inside” lawyers (lawyers employed by corporations) to acquiesce in their clients’ misconduct. These psychological pressures arise from the multiple roles that in-house lawyers play – as mere employees (subject to obedience pressures), faithful agents (subject to alignment pressures) and team players (subject to conformity pressures).
In this posting, I would like to focus solely on their role as “mere employees” and the obedience pressures that arise from that role. In a prior posting of The Situationist, Stanford psychology professor Philip Zimbardo described the famous electric shock experiments conducted at Yale University in the early 1960s by Stanley Milgram, which provide the strongest illustration of the power of “obedience pressures.” If you are unfamiliar with these experiments, I strongly urge you to read Zimbardo’s posting, The Situational Sources of Evil – Part I. In short, the most common reaction of participants to the experimenter’s explicit commands (“The experiment requires you to continue to go on. Please go on!”) was to continue administering brutal and perhaps lethal electric shocks to the other subject (actually, a confederate) despite his desperate protests.
Zimbardo, who had known Milgram since high school, contacted Milgram and asked him whether any of the participants had even checked into the adjacent room to see if the recipient of electric shocks was in need of medical care. Shockingly, not one of the 1000 subjects in Milgram’s experiments did so. As explained by Zimbardo and co-author Michael Leippe, “’Stay in your seat, until I tell you that you can leave,’ is perhaps one of the most lasting lessons of our early childhood education – coming from elementary school teachers. That behavioral rule is so internalized that it controlled the reactions of the ‘heroes,’ in the Milgram studies, who disobeyed the experimenter’s external command but totally obeyed this more deeply ingrained internal command.”
Milgram argued that in modern society, the child is socialized to obey not just mom and dad, but impersonal, legitimate authority figures, e.g., schoolteachers, police officers, bosses, who we perceive as having a right to issue commands. Mere indications of rank – dress, diploma, title, insignia – are often sufficient to confer the status of “legitimate” authority.
Accordingly, to understand why sophisticated, educated and experienced in-house lawyers acquiesce in their clients’ misconduct, one only needs to be reminded of the banal tendency to obey superiors. But before I talk about in-house lawyers, let me talk about obedience pressures a bit more generally. Obedience pressures played a role in Enron, WorldCom and many of the other publicized corporate scandals. Former Enron CEO Jeff Skilling was sentenced last October to 24 years in jail, even though there wasn’t much evidence establishing a vivid connection between him and the Enron fraud, which, for the most part, was carried out by his subordinate, CFO Andrew Fastow. Similarly, former WorldCom CEO Bernie Ebbers was sentenced to 25 years in jail even though the fraud was carried out, for the most part, by CFO Scott Sullivan. The reality is: when your boss tells you to “make the numbers” or hit the projected quarterly earnings target, you can not underestimate the enormous pressures to make it happen — even if it means violating accounting conventions and the law.
Georgetown law professor and moral philosopher David Luban was “spot on” with his description of the lessons of Milgram’s experiments: “Milgram demonstrates that each of us ought to believe three things about ourselves: that we disapprove of destructive obedience, that we think we would never engage in it, and, more likely than not, that we are wrong to think we would never engage in it.”
Juries, composed mostly of employee-subordinates, appear to at least have a basic understanding of obedience pressures, which might explain why they handed down “guilty” verdicts for the bosses at Enron and WorldCom and handed down a “not guilty” verdict for one high-profile subordinate — Mark Belnick, former general counsel of Tyco who reported to CEO Dennis Kozlowski (who is sitting in prison right now for looting Tyco). In contrast, tenured academics, who – for the most part — can’t get fired, seem to have a tougher time comprehending obedience pressures (at least that is what I have observed).
Inside counsel, as employees of the firm, are inclined to take orders and accept the “definition of the situation” (a phrase coined by Milgram) from their superiors. These superiors happen to be a cohort of non-lawyer senior managers vested with the authority to speak on behalf of the organization and entrusted to give direction to inside counsel. They create the reality for inside counsel: they define objectives, identify specific responsibilities for inside lawyers and, ultimately, determine whether an inside lawyer’s performance is acceptable.
And accepting management’s “definition of the situation” means accepting management’s framing of the inside lawyer’s role and responsibilities. This framing provides that compliance responsibilities be segmented. Although inside counsel’s duties include a prominent role in corporate compliance, it is business management that jealously guards the right to decide whether to comply with the law, which is seen as the ultimate risk management decision. For inside counsel to challenge management’s decisions or management’s authority to make decisions would then amount to clear insubordination.
Obedience in the corporate context will be substantial, so we should not be surprised by the banal tendency to listen to superiors. Also, given the stark financial self-interest, which is threatened by asking too many questions or being viewed as obstructionist, we should not be surprised that inside counsel regularly succumb to the situation. To be clear, this is not to say that all inside counsel cave into obedience pressures. Indeed, one need only look at the few reported cases in which inside counsel sued their employers for being retaliatorily discharged (for having taken an ethical stand) to see that some (albeit a few) are able to resist those pressures. For a more thorough treatment of obedience pressures, please check out my article, The Banality of Fraud: Re-Situating the Inside Counsel as Gatekeeper.