Many law professors see problems with the way our federal government prosecutes — or doesn’t prosecute — major corporate crime.
But a handful say the unspeakable — let’s just get rid of corporate criminal liability.
Brooklyn Law School’s Miriam Baer is one of those handful.
In a little noticed law review article published in 2008 in the Indiana Law Journal titled Insuring Corporate Crime, Baer proposes that we get rid of corporate criminal liability and replace it with an insurance system.
Under Baer’s proposal, insurance companies would “examine corporate compliance programs, estimate the risk that a corporation’s employees would commit crimes, and then charge companies for insuring those risks.”
“The insurance would cover civil penalties associated with the entity’s employee-related criminal conduct,” Baer writes.
Under Baer’s proposal, a corporation can “opt-out” of the criminal justice system by buying compliance insurance.
As a result, a company’s crimes will “at worst, result only in civil penalties resulting from lawsuits initiated by private or government parties.”
“Compliance insurance is preferable to corporate criminal liability if it more efficiently encourages entities to identify, quantify, and reduce their compliance risks ex ante but also continues to compensate victims ex post,” Baer writes. “This system therefore would have to pay attention to the manner by which it compensated the victims of (the corporation’s) employee’s criminal conduct.”
“This proposal would replace corporate criminal liability with civil penalties assessed by courts and sought primarily by civil government attorneys (which is already largely the case due to parallel litigation under numerous regulatory regimes), and require corporations to purchase minimum insurance coverage to cover these penalties,” Baer writes.
“Preventing corporate crime is and will remain an important topic for private and public entities alike. Just as communities have been unable to find ways to prevent their citizens from transgressing deeply held norms of what is right and wrong, so have organizations failed to prevent their employees from breaking the law,” Baer concludes.
“That failure is unlikely to change any time soon. Insurance may not be the final answer on preventing socially undesirable behavior within corporate firms. It does, however, provide a promising framework for further discussion of how we might go about reforming corporate criminal law.”