Table of Contents Introduction I. "Managerialist" Views of Corporate Citizenship II. The Eclipse of Managerialism III. Managers as Amoral Profit-Seekers and Lawyers as Amoral Servants of Clients IV. Corporate Counseling in Practice V. Some Questions About Heineman's Project Conclusion Introduction
In the spring of 2015, David Wilkins, professor at Harvard Law School, and Ben Heineman, Jr., former general counsel at General Electric (GE) and now a lecturer at Harvard, organized a conference of corporate in-house lawyers and law firm partners. (1) The conference took as its theme a manifesto--whose principal authors were Wilkins; Heineman; and William Lee, a former managing partner at WilmerHale--proposing a role for in-house counsel based on a capacious concept of the client company's enlightened self-interest and obligations of citizenship. (2) Heineman has since expanded on this set of ideas in a book: The Inside Counsel Revolution: Resolving the Partner-Guardian Tension. (3) This book is partly an account of his tenure at GE, partly a manual for corporate in-house counsel, and mostly an elaboration of the theme of the Harvard Manifesto that it is the company lawyer's job to balance the client company's interest in "performance"--long-term financial prosperity--and "integrity." (4) "Integrity" turns out to be shorthand for a collection of traits and actions: responsible mitigation of risks of harmful effects of the client's business; honest dealing and avoidance of corruption; and support for public policies that regulate harmful externalities and supply public goods--such as infrastructure, education, and health. (5) This project seems of a piece with parallel--gradual and fragile--movements, which one can see in the policies of some nation-states and in the World Bank and International Monetary Fund, away from the hardline neoliberal (or market fundamentalist) doctrine that unfettered business enterprise under minimal state supervision is the only feasible route to global well-being. (6)
The Harvard Manifesto and Heineman's book go well beyond the kind of high-minded corporate rhetoric generally deployed for ceremonial occasions. There is a lot of high-minded rhetoric in both, but it is accompanied by many concrete and specific examples and proposals. I want to focus on the pieces of both works that deal with lawyers, law firms, and their corporate clients as citizens with public responsibilities. For me, the most interesting aspect of this initiative is that it returns to some earlier notions of the responsibilities of legal professionals as citizens while also trying to update those traditions to take account of present opportunities and obstacles.
I devote most of this Essay to Heineman's book because it contains the more extensive version of his views. But let me first quote from the more compressed and succinct Harvard Manifesto to give the flavor of the general argument. The authors begin with the assertion that "the ultimate goal of corporations--especially global companies--should be the fusion of high performance with high integrity, with the general counsel and inside lawyers playing key roles in achieving both." (7) "High performance" is simply conventional profit-seeking for the benefit of "shareholders and other stakeholders upon whom the company's health depends." (8) "High integrity" is a considerably more complicated and multiform concept, which includes
robust adherence to the letter and spirit of formal rules, both legal and financial; voluntary adoption of binding global ethical standards that go beyond existing rules, including balanced proposals on future public policy; and employee commitment to core values of honesty, candor, fairness, trustworthiness, and reliability. It involves understanding, and mitigating, other types of risk--beyond direct economic risk--that can cause a company catastrophic harm: legal, ethical, reputational, communications, public policy, and country-geopolitical. (9) Achieving these goals casts special obligations on the corporation's lawyers, who have not been discharging them well in recent years:
For lawyers, these integrity issues go far beyond the strictures of mandatory legal professionalism. ... Ultimately, high performance with high integrity creates fundamental trust among shareholders, creditors, employees, recruits, customers, suppliers, regulators, communities, the media, and the general public. This trust is essential to sustaining the corporate power and freedom that drives the economy--trust which in the past 10 years has dramatically eroded due to stark corporate scandals and unthinkable business failures. (10) The corporation's outside lawyers share this elevated mission:
But it is not just the individual attorneys employed by law firms who must rededicate themselves to their duties as lawyer-citizens. As with the corporations that comprise the bulk of large law firms' clients, law firms can and should redouble their efforts in the area of "law firm citizenship," with the goal of advancing pertinent social goods. This might include public policy efforts in areas that directly affect law firms' business and professional interests (e.g., tax reform or legislation aimed at litigation and professional conduct), as well as public policy efforts in areas that affect the business interests of a given law firm's core client base--so long as in each case the firm is careful to advocate for policies that further the broad public interest and not just the firm's or its client's parochial ones. (11) In addition to such "public policy efforts," the authors recommend that law firms
adopt a focused philanthropy model, concentrating resources and time on a specific group of organizations, with an eye toward long-term relationship and capacity building. This includes financial support, pro bono legal representation, volunteer service, and in-kind donations. A firm could commit to a financial contribution over time to each selected organization, but also promise and commit the time and energy of lawyers and staff to the organization. This long-term commitment of money and manpower not only benefits the selected organizations but also allows the firm to act as an institutional citizen in a different and meaningful way. Firms also can and should embrace a role in addressing broader societal issues, for example education, scientific research and development, or cybersecurity and privacy. Firms must recognize and reward those engaged in these efforts both in compensation and with other recognition. (12) Now, this ambitious program may not, in the end, result in much of substance. But it does seem to represent an important rhetorical shift away from conceptions of the business firm and of the obligations of the lawyers serving the firm that came to prevail around 1980.
In these conceptions it is inappropriate for business firms to serve any interest but that of maximizing profits for shareholders and inappropriate for their lawyers to do anything but help them do so. (13) It is, in any case, impractical, as such a firm would become a takeover target or have to replace its managers. (14) It is equally improper under these conceptions for lawyers to question client managers' chosen ends. That is also impractical. In-house lawyers will be bypassed or replaced for giving unwelcome advice, and outside law firms will fear losing business--or a star partner who recruited that client--to another firm. Similarly, in some conceptions of ethical lawyering, it is not only permissible but also necessary for a lawyer to adopt as her client's "interests" whatever the corporate agent who is consulting the lawyer presents as what the actual client immediately wants. (15) At its worst, as I spell out in more detail below, this doctrine not only rationalizes passive acceptance of some pretty dodgy business practices but also actively promotes them.
The Harvard Manifesto and Heineman's book assume that lawyers can and should have some influence in helping determine business clients' enlightened long-term interests and goals, which necessarily presupposes that business firms will have some leeway to act on that advice. In this respect, are the manifestos more realistic than the doctrine that business firms must follow the commands of the market or go under, and lawyers the commands of the client? Yes, in a way. But they are also potentially more radical, even Utopian, in a good way. They represent a throwback to the "managerialist" conception of the business firm that emerged in the early twentieth century and dominated both business- and legal-professional ideology in the postwar period of 1945 to about 1975. (16)
"Managerialist" Views of Corporate Citizenship
This managerialist ideology has its origins early in the twentieth century, when some prominent lawyers and business managers developed a complementary vision of their roles as leaders in business organizations. Managers would seek, and encourage their lawyers to give advice that would help them seek, to realize public values in the course of profit-seeking--or to put this another way, to be responsible corporate citizens, aware of potential conflicts their operations might provoke and harmful effects that might ensue, and to constructively collaborate to mitigate those conflicts and effects.
Louis Brandeis was one of the principal theorists--and most effective practitioners--of this role. His famous 1905 speech titled "The Opportunity in the Law" is now remembered chiefly as a summons to public interest lawyering, a call to leading lawyers to act for "the people" as well as for corporate clients. (17) It also urges upon lawyers a public interest-seeking role, independent of their functions as representatives of any client interests, as policy statesmen and drafters of and advocates for sound legislation. (18) But its main purpose is to urge lawyers, in their capacity as advisors to businesses, to counsel...