Corporations are hiring elite lawyers to be corporate compliance officers.

That can be seen as good news for compliance.

But what about the downside?

One is that elite lawyers may be more likely to discount red flags that arise when a corporation’s performance is just too good to be true. 

Miriam Baer is a Professor of Brooklyn Law School and author of a recent paper titled Compliance Elites.

Baer is currently a visiting fellow at the Edmond Safra Center for Ethics at Harvard University.

“I noticed that all of these compliance officers had elite resumes,” Baer told Corporate Crime Reporter in an interview earlier this month. “They all had been to fancy schools. They had spent a stint in the federal government. Some of them had been partners at big firms. They were all elites. What does that mean if the person who runs the compliance department is an elite? On one hand, that’s great, it shows that corporations take compliance seriously.” 

“And in any event, someone with that kind of elite resume can garner respect among his or her peers and maybe that respect filters into better resources into the internal compliance function. That’s the happy story.”

“It seemed to me that the negative story was that someone who always jumps through the hoops, who always does extremely well in academic tournaments, is exactly the kind of person who is going to be blind to the red flags when companies create highly exacting performance regimes, create all sorts of goals that people can’t possibly meet and is going to miss those situations where the performance looks too good to be true. That person will say to himself or herself – well, I always hit all the targets, so why should I be surprised if this person is hitting the target?”

“I dub it performance blindness. You are blind to other people’s performance weaknesses because you yourself have always been a superstar.”

It’s the superstars who fly through the revolving door. And many believe the revolving door undermines a strong criminal justice system.

“David Zaring has talked about a reverse revolving door. Is the revolving door from the federal world or the private world? Mary Jo White, for example, has always been someone who has been a federal person who bounced back to the private world but then back to the public world.” 

“All attorneys say to themselves, I am representing my client. I will do the best for my client. There is this interesting question of – what is the viewpoint you carry into this new atmosphere? We always assume that the private viewpoint is somehow infiltrating the public officer. I can imagine the opposite happening. You have this public viewpoint and it colors how you behave within the private space. And in some ways, that’s what is going on when a corporation announces – look at us, we just hired a compliance officer from a federal office. There is that expectation that the former federal prosecutor brings with her – her knowledge, her experience, her perspective that was nurtured in a federal setting.”

“I’ll say two things about the revolving door. One is optics. The optics of the revolving door can be really bad. That’s a problem. On the other hand, there is the question – to what extent does the revolving door lead to worse decisions? That’s not clear to me. People have a sense there is something bad. There are some bad salient cases. But empirically, the case is not made.”

“And then what do you do? If you say – you must never work for a corporation, that’s a problem.”

No one says that. There is the middle ground of if you came from a top enforcement position at the SEC, you can’t represent defendants before the SEC for a period of five years.

“Why five years?” Baer asks.

It doesn’t have to be five years. It can be less or more. Pick a number. But you don’t want a case like the Boeing case where the prosecutor within the year goes to work for Boeing’s criminal defense firm. 

She cuts the sweetheart deferred prosecution agreement with Boeing and then goes work for the firm she negotiated the agreement with.

“I don’t know this case. Is it bad optics? Yes. Did the prosecutor say to herself – I’m going to give Boeing a deferred prosecution agreement and therefore get a job? No. I don’t believe that is how it works.” 

“The law firms want people who are aggressive. They are going to get a deferred prosecution agreement anyway. I don’t see the quid pro quo.”

“I agree it looks terrible. And those looks matter. That is what alienates and angers people. As I get older, I see how those feelings matter.”

“I understand the optics. But in one case the prosecutor cuts the deal and stays with the federal government. And in the other the prosecutor goes to the law firm. I don’t know that you end up with a better deferred prosecution agreement with the prosecutor who stayed with the government. I don’t see the causal connection.”

Baer will be participating in a conference later this month at Georgetown Law Center titled Imagining a World Without Corporate Criminal Law. 

The organizer says that “leading scholars representing diverse viewpoints will imagine criminal law without corporate liability and trace the possible implications of such a development.” 

What will be your viewpoint?

“I’m working on that paper right now – Forecasting the How and Why of Corporate Crime’s Demise. It’s a fun theme. It will lead to a fascinating day. Rather than engage in some kind of futuristic discussion of what the world will look like without corporate criminal liability, I thought it might be more interesting to focus on what would get us there.” 

“My piece focuses on certain statutory trends and interpretations that would undercut the government’s ability to investigate corporate crime and threaten the corporations the way they currently do to get corporations to cough up information.”

“It would be a one two punch. And this is coming at the worst time for the Department of Justice, which is facing a number of existential threats. It has just been through four years that have undermined its legitimacy and professional norms. Right now, when it should be thinking about these future trends and its ability to prosecute corporate crime, it is more likely thinking about how we fix our professionalism and structural problems.” 

There are people who say – we should not have corporate criminal law. They say – no mind, no crime. I’m sure there is going to be that point of view represented at this conference. But you are not from that point of view, are you?

“In 2008, I wrote a paper titled – Insuring Corporate Crime. I was asking – if you are already in this world of deferred prosecution agreements, not really criminally prosecuting these corporations anyway, you might ask – are these deferred prosecution agreements accomplishing the blaming function of the criminal law? Might we be better off to move to another kind of system. That is why I came up with this idea – what would the world look like if you required corporations to carry some kind of compliance insurance? I was admittedly engaging in a thought experiment.” 

“It’s very hard to imagine a world where you say – we are never going to punish a corporation. We do think criminal law plays an important blaming function and it means something. However, if in fact we are in this quasi criminal law world, where it’s really criminal, because many of these corporations sign these deferred prosecution agreements, then there is a question – we have to keep corporate criminal liability as is, no matter what? I don’t know if that is necessarily best for society.” 

[For the complete q/a format Interview with Miriam Baer, 35 Corporate Crime Reporter 39(11), Monday October 11, 2021, print edition only.]