In an article in the latest Business Lawyer (68 Bus. Law. 57, 62-63), former Delaware Supreme Court Chief Justice E. Norman Veasey has some very nice things to say about yours truly's book Corporate Governance after the Financial Crisis
Professor Bainbridge has put his finger on the “go along to get along” problem. In a chapter entitled “The Gatekeepers” in his recent book, he carefully analyzes the tension the corporate lawyer experiences between gatekeeping and job security:
The gatekeepers failed rather miserably during the dotcom era. Enron was primarily an accounting scandal, little different from the 150-plus other accounting fraud cases that the SEC investigates in most years. Indeed, this was true not just of Enron, but also most of the dotcom era corporate scandals ....
.... There is little doubt that lawyers played an important role in the scandals. Sometimes their negligence allowed management misconduct to go undetected. Sometimes lawyers even acted as facilitators and enablers of management impropriety ....
.... The nature of the legal market gives lawyers--both in-house and outside counsel--strong incentives to overlook management wrongdoing. As to the former, even if the board of directors formally appoints the in-house general counsel, his tenure normally depends mainly on his relationship with the CEO ....
.... Both the general counsel and outside lawyers necessarily have access to a wide range of information, including but hardly limited to information relating to law compliance by the organization. Because the management-attorney relationship tends to become the focus of the attorney's relationship with the firm, however, lawyers have strong incentives to help management control the flow of information to the board of directors. Worse yet, attorneys may be tempted to turn a blind eye to managerial misconduct or even to facilitate such misconduct ....
While these excerpts highlight the anxieties and temptations that may face in-house counsel, the entirety of Professor Bainbridge's book paints a balanced picture of the temptations as well as the integrity of in-house lawyers.
