David Uhlmann on the Lack of Resolve to Prosecute Corporate Crime and the Expressive Function of the Criminal Law

In a new paper — The Pendulum Swings: Reconsidering Corporate Criminal Prosecution — University of Michigan Law Professor David Uhlmann points out that “for more than a decade, the Justice Department morphed its approach to corporate crime, eschewing criminal prosecutions in favor of deferred prosecution and non-prosecution agreements that allowed large corporations to avoid the ignominy of criminal convictions.”


In recent years, the pendulum has swung to slightly more corporate criminal prosecutions.

What explains the conflicted approach to criminal prosecution of corporations?

Uhlmann rejects what he considers “a cynical response” — that “the revolving door between Criminal Division leadership and white collar law firms leads to a lack of resolve about the need to prosecute corporations.”

He accepts what he calls “a more nuanced view” that “the Justice Department’s erratic approach reflects a lack of agreement among practitioners about what is accomplished by the criminal prosecution of corporations, a disagreement that also exists in scholarly accounts of corporate criminal liability focusing on retributive and utilitarian purposes of punishment.”

Uhlmann shifts the focus to a third pillar or corporate criminal liability — what he calls “the expressive function of the criminal law.”

“The focus on retributive and utilitarian justifications — both in practice and in academia — obscures the expressive function of the criminal law and the societal need for condemnation, accountability, and justice when crime occurs,” he writes.

Uhlmann argues that the expressive function of the criminal law plays an even more essential role for corporations than it does for individuals.

“We confer significant benefits on corporations with the expectation — indeed, the mandate — that corporations exist for legal purposes alone,” Uhlmann writes. “When a corporation exploits those benefits and violates the public trust by engaging in illegal conduct, we must make clear that its behavior is unacceptable and condemn its conduct as criminal.

He argues that “corporations have outsized power and influence in our society.”

“When a corporation abuses that power and influence by committing crimes, we must impose blame, require accountability, and insist upon acceptance of responsibility,” he writes.

“The distinctive feature of corporate criminal prosecution is its ability to label corporate lawlessness as criminal, which is qualitatively different than labeling misconduct as a civil or administrative violation and critical to assuring society that corporate criminals are brought to justice.”

Uhlmann breaks down the expressive function of corporate criminal liability into three elements.

First, line-drawing and norm-setting that is essential to upholding the rule of law and validates the choices of companies who meet their legal obligations.

Second, societal condemnation as a sanction for unlawful behavior and how the stigma or shame that accompanies criminal punishment is particularly significant in the corporate context.

And third, how accountability and the sense that justice has been done is necessary in the face of corporate wrongdoing — and how corporate criminal prosecution promotes the societal catharsis that must take place for us to move beyond the harmful effects of wrongdoing.

“The labeling of a corporation’s conduct as criminal sullies the corporation reputation as a law-abiding and ethical corporation,” Uhlmann writes. “The company may lose business as a result, but reputational harm is a broader sanction than lost business.”

“Fines and lost business can be internalized by the corporation and may be viewed within the company — and by society — as a price for engaging in misconduct. Societal condemnation and the resulting reputational harm are sanctions that cannot be monetized and therefore can have more enduring effects.”

“Whether reputational harm persists for a long time or dissipates quickly will vary depending on the corporation involved and the nature of its misconduct. To some extent, the duration of the stigma of criminal prosecution will depend upon factors within the corporation’s control, including the degree to which the corporation expresses remorse and takes steps to improve its compliance efforts. Stigma may nonetheless endure based on factors beyond the corporation’s control, such as public perceptions of the wrongdoing and the extent to which corporate values are seen as the culprit. In the interim, the reputational harm of criminal prosecution can be significant for corporate management and employees.”

Uhlmann says that the notion that criminal and civil sanctions are indistinguishable is belied by by his experience as a federal prosecutor, including seven years as the Chief of the Justice Department’s Environmental Crimes Section, “when corporate officials and their attorneys uniformly insisted that they would prefer civil enforcement to criminal prosecution.”

“If societal condemnation has substantial expressive benefits, it follows that when corporate wrongdoing occurs and is not prosecuted criminally there may be significant expressive costs,” Uhlmann writes. “When we sanction corporate misconduct with a deferred prosecution or civil penalties that do not involve the same degree of societal condemnation, we minimize corporate misconduct and may risk condoning it.”

“When criminal sanctions are not sought, we express a societal judgment that the conduct is less egregious. . .Non-criminal alternatives also express to those affected by the misconduct that any harm they suffered is less significant. Resulting cynicism about whether corporations are above the law and who is served by the justice system can do as much harm as the corporate misconduct.”

Copyright © Corporate Crime Reporter
In Print 48 Weeks A Year

Built on Notes Blog Core
Powered by WordPress