The framing effects of professionalism: is there a lawyer cast of mind? Lessons from compliance programs.

Author:Rosen, Robert Eli
Position:From Introduction through III. Study B. Data and Research Strategy 3. Measures, p. 297-327
 
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Professionals working inside companies may bring with them frames of mind set by their professional experience and socialization. Lawyers, in particular, are said to "think like a lawyer"--to have a lawyer cast of mind. In seeking power within a company and in exercising the power that they obtain, professionals may draw on their professional background to frame, name, diagnose, and prescribe a remedy for the company's problems. In making decisions about their compliance with the law, companies are constrained not only by their environment, but also by their agents' understanding of whose (or what) interests the company should serve. In particular, compliance managers' understandings will frame and influence their companies' calculations of the value, benefits, and costs of compliance activities. The profession of the compliance manager then may influence how the company complies with the law. This Article uses data from a survey of 999 large Australian businesses to examine the professional background of the person in charge of compliance and (1) how they analyze the costs, benefits and risks of non-compliance; and (2) their company's structures and practices of compliance. Contrary to our hypotheses, we find that the professional background of the individual responsible for compliance has little impact on a company's compliance management structures and practices or assessment of stakeholders. The exceptions are that having a lawyer in charge of compliance is associated with the company's perception of heightened legal risk; and where the person in charge of compliance is a lawyer, the company compliance efforts will be marked by manuals and training programs, but not more fulsome compliance structures, which are present when a compliance specialist leads the department. Unfortunately, our data also reveals that these compliance structures are generally merely formal--and likely largely symbolic.

Introduction I. Julius Henry Cohen and the Lawyer Cast of Mind II. Professional Frames' Influence on Business Behaviors III. Our Study A. Outline of Analytic Model/Hypotheses B. Data and Research Strategy 1. Data 2. Research Strategy 3. Measures 4. Testing Hypothesis 1: Compliance Behavior of Respondent's Company 5. Testing Hypothesis 2: Respondent Company's Risk Analyses 6. Main Independent Variable 7. Control Variables a. The Firm's History b. Firm-Level Factors IV. Results A. Hypothesis 1: Direct Effects of Professional Orientation on Compliance Management Behaviors B. Hypothesis 2: Indirect Effect of Profession on Risk Analyses V. Discussion/Conclusion A. Summary of Results B. Limitations of Study C. Firm Identity and the Profession of the Person in Charge of Compliance D. Firm Norms and Professional Behavior E. The Two Faces of Lawyers Conclusion--Back to Julius Henry Cohen The mind of the lawyer is the essential part of the machinery of justice.... The progress of the law means the progress of the lawyer, not of a few talented men who are on the outposts of legal thought, but the great army of the commonplace.... (1)

INTRODUCTION

An inveterate tradition in thinking about the legal profession is to ascribe to lawyers a "cast of mind." (2) "Thinking like a lawyer" supposedly names a peculiar mode of both analysis and response. (3) The "great army" of lawyers is said to have "[t]he mind of the lawyer." (4)

Experience, socialization, and education in particular, are thought to construct the lawyer cast of mind) By performing law jobs, such as drafting documents or appearing before tribunals, lawyers may develop habits of heart and mind. Some of these are characteristic of all fiduciaries, such as careful work, anticipation of risks, and unselfish devotion. (6) Others are characteristic of the legal profession, such as unquestioning loyalty, partisanship, and the ability to challenge authority with respect. (7) Yet others may be less ennobling, such as being adversarial, critical, closed, mono-disciplinary, aggressive, or arrogantly independent. (8) There may be arguments about what character traits are taught, or how to teach them--especially given divergent moral and political values--but there is little controversy that legal practice and education develop "thinking like a lawyer."

The framing effects of "thinking like a lawyer" may be understood as an instance of the more general framing effects of professionalism. Professional role and background as consequential for behavior has been argued for by Berle & Means, (9) Neil Fligstein, (10) Herbert Simon, (11) Amos Tversky, (12) and many others. (13)

Their work suggests that professional framing operates even outside what may be seen as the profession's "jurisdiction." (14) Lawyers, for example, may prefer acquisitive, rather than internal diversification, strategies when they become CEOs. (15) Or, they may spend less on Research and Development (R&D) than CEOs with other backgrounds. (16) Social fields, like the economy or the family, are sometimes "legalized," which occurs when legal professionals reorder aspects of a social field by successfully applying legal forms, concepts, and imaginings outside a traditional legal arena (normally thereby creating jobs for the legally trained). (17) Legalization, however, is (fortunately) not always successful: The power of thinking like a lawyer may or may not support lawyers as they move into jobs outside what has heretofore been considered "legal." Or, only aspects of thinking like a lawyer may travel with the lawyer.

This Article inquires into the framing effects of professionalism on organizational compliance structures and practices, with particular attention to the distinctive influence, if any, of the lawyer cast of mind. We ask: When lawyers are compliance managers, do companies' structures and practices of compliance differ from when a chief financial officer or specialized compliance professional, company secretary, or chief executive officer is the manager of compliance? We use survey data to measure the framing effects of professionalism and the distinctiveness of the lawyer cast of mind on compliance structures and practices.

Self-introspective writing on "the lawyer cast of mind" and "thinking like a lawyer" is vast. This Article appears in a special issue of the Fordham Urban Law Journal inspired by the work of Julius Henry Cohen. Part One of the Article uses his work to discuss the lawyer cast of mind. Part Two of the Article provides a brief literature review about the influence on business behavior of the professional background of managers.

In Part Three, we develop and present a theoretical model for research. We then test this model using our data from 999 large Australian businesses. Our data includes many lawyers and other professionals who manage their organizations' compliance structures and practices. Contrary to our hypotheses, we find that the professional background of the individual responsible for compliance has little impact on a company's compliance management structures and practices or assessment of compliance risks. The exceptions are that having a lawyer in charge of compliance is associated with the company's perception of heightened legal risk; and where the person in charge of compliance is a lawyer, the company compliance efforts will be marked by manuals and training programs, but not more fulsome compliance structures, which are present when the department is headed by a compliance specialist. After presenting our data, we consider its significance and limitations.

Currently, there is a contest among professions about jurisdiction over compliance systems (18): Who should lead them? In the United States, we are seeing Chief Compliance Officer positions emerge, often out of and separating from the legal department. (19) For some, this divorce is a happy event, as the role of "cop" is removed from the legal department. (20) For others, this is a reduction in the lawyer role and they seek to resist it. Our research took place in Australia at a time when there was no consensus as to who should be in charge of the compliance systems that we examined. This makes our study an excellent one for seeing whether and how the lawyer cast of mind is put in play compared with other professional frames.

It is not only students of the professions who can benefit from a better understanding of the role of professionals in compliance programs. There is a great deal of policy and research interest in how companies respond to the threat of external regulation and regulatory enforcement by putting in place internal controls (compliance systems). (21) The development of company compliance and risk management structures has been the focus of legislative, judicial, and private regulatory initiatives. (22) In the United States, the presumed ability of the chief compliance officer to direct corporate behavior is the basis for individual liability (23) and for the strategy of the regulator. (24)

Providing corporate leadership opportunities to professionals has been a mechanism that some have hoped would make corporations more responsible. (25) Their professional skills would make them better sensors of environmental influences and their professional commitments would make them lead the corporation to valuing compliance. (26) Either their socialization or their career interests would lead them to be carriers of professional norms inside the corporation. (27) As employees, they would make the corporation more permeable to regulation. (28) In the conclusion, we return to this hope.

  1. JULIUS HENRY COHEN AND THE LAWYER CAST OF MIND

    Understood functionally, the lawyer cast of mind has various aspects. First, it is normative control: it constructs what is virtue and vice for a lawyer. Second, it creates identity: it unites and separates lawyers. Third, it forges jurisdictions: it maintains, gains, and declines work for the profession. And fourth, it establishes traditions: it speaks one set of...

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