Writing the rules of attorney-whistleblowing: who gets to decide, and how do we make the decision?

• Author: Bein, Alex
• Position: Introduction through II. Conducting a Comparative Institutional Microanalysis of Attorney Whistleblowing Regulations: What Data Do We Need? A. The Regulatory Context to Which This Note's Microanalysis Will Be Applied, p. 967-992

INTRODUCTION I. Institutional Choice and Comparative Institutional Choice Microanalysis A. What Is Institutional Choice Theory? 1. Theoretical Background a. Institutional Choice Theory's "Legal Realist" Roots b. Institutional Choice Theory's Social Science Roots 2. "Goal Choice" and "Institutional Choice:" Komesar's Two-Part Conceptualization of Modern Institutional Choice Theory a. "Goal Choice" b. "Institutional Choice" 3. How "Goal Choice" and "Institutional Choice" Relate to "Comparative Institutional Choice Analysis" B. Institutional Choice and Attorney Behavior Regulations 1. The Historical Role of ICT in the Creation of Attorney Conduct Rules a. The Initial Drafting of Model Rule 1.6 b. The Promulgation of SEC Rule 205.3 c. The Second Circuit Decision in United States v. Quest Diagnostics, Inc 2. Attorney Conduct Rulemaking Process's Need for More Rigorous Institutional Choice Analysis a. Lack of Rigorous Public Policy Analysis and the Rules' Relevance in a Growing and Evolving Legal Industry b. Lack of Public Policy Analysis in the Confusing and Contradictory Nature of Ethics Rules C. Institutional Choice Analysis and Attorney Whistleblowing Regulations 1. Institutional Choice Analysis on Attorney Whistleblower Regulations, and Need for More Rigorous Analysis 2. Framework of Comparative Institutional Choice Microanalysis in Future Institutional Analysis II. Conducting a Comparative Institutional Microanalysis of Attorney-Whistleblowing Regulations: What Data Do We Need? A. The Regulatory Context to Which this Note's Microanalysis Will Be Applied B. The Social Goals Implicated by Attorney Whistleblowing Regulation 1. A Lawyer's Ethical Duty of Confidentiality 2. Protection of Investors and the Public's Economic Well-Being 3. The Relationship Between Society's Interest in Confidentiality Protections and Its Interest in Investor Protections C. The Potential Regulating Institutions for Attorney Whistleblowing Regulations 1. The State Judiciary 2. State Legislature III. A Comparative Institutional Microanalysis of State Courts and Legislatures Regarding Their Relative Competence to Draft Attorney-Whistleblowing Regulations A. Institutional Expertise 1. State Judiciary a. Substantive Expertise b. Procedural Expertise 2. State Legislatures a. State Legislatures' Substantive Expertise b. State Legislatures' Procedural Expertise B. Impartiality 1. State High Courts 2. State Legislatures C. Accountability and Accessibility 1. State High Courts 2. State Legislatures D. Conclusion of the Comparative Institutional Choice Microanalysis E. Further Narrowing the Context of Institutional Microanalysis Raises Questions for Future Study Conclusion INTRODUCTION

Consider the following hypothetical situation: a state legislature, seeking to fight back against corporate financial fraud, enacts an amendment to its state whistleblower laws. This amendment requires corporate attorneys to publicly report the past financial frauds of their clients in certain circumstances--even when this reporting involves the disclosure of otherwise confidential client documents. (1) At first glance, the proposal may seem like it would fall within the purview of a state legislature: the amendment deals with financial fraud prevention and correction, and the state's general economic health, two commonly legislated areas of law. However, the amendment also directly regulates the conduct of practicing attorneys. As such, the amendment would encroach upon the regulatory territory of state judiciary branches, which have traditionally held themselves out as the sole arbiters of attorney conduct. (2)

Attorney behavioral rules, commonly referred to as "rules of professional conduct" or "ethics rules," are typically drafted by professional bar associations, which submit these proposed rules to the state's highest court for approval and enactment. (3) The rules do not become authoritative law in the relevant state unless adopted by the state's highest court, "which is free to draft its own rules, tinker with the bar association proposals, or leave the field unregulated." (4) The attorney-regulation process has thus been dominated by bar associations and, to a lesser extent, the courts, whose philosophies and approaches to regulation have controlled the field. (5)

However, this drafting process has suffered from a lack of rigorous public policy analysis. (6) While public policy concerns such as regulatory effectiveness or economic efficiency have not been wholly ignored, scholars argue that such concerns have been overshadowed by the extraneous effects of politics, compromise, and public opinion. (7) Rule-makers' resulting failure to adequately account for the public policy implications of their ethics rules has had two primary effects on those rules. First, this failure has hampered the ability of drafters to maintain the rules' effectiveness and relevance in a growing and evolving legal industry. (8) Second, the failure has played a role in the confusing and often contradictory nature of ethics rules as they currently stand. (9) These difficulties are compounded by the fact that a growing number of rulemaking institutions have independently begun drafting their own regulations governing overlapping areas of attorney behavior. (10)

One way in which drafters of ethics rules can overcome these problems--and create more effective and efficient regulations--is by studying potential applications of rules through a form of public policy analysis called "comparative institutional choice microanalysis." (11) The purpose of such analysis is to help rule-makers better understand how to achieve their desired public policy goals on a case-by-case basis. (12) Comparative institutional choice microanalysis informs decision-makers' choices through the lens of "institutional choice theory" (ICT), which stands for the proposition that the effectiveness of a rule is determined by particular qualities of the institution tasked with drafting or enforcing said rule. (13) According to ICT, the ability to make informed decisions regarding which institution to entrust with regulatory control is the key to creating successful behavioral regulations. (14)

ICT is particularly useful in the area of attorney conduct regulation, where the social interests underlying a given regulation are both varied and complex. (15) ICT suggests that, where individuals may struggle to fully understand and act on those social interests, rule-making institutions possess a wide variety of characteristics that better qualify them to develop and apply regulations to further those goals. Because no institution is perfect, a public policy analysis applying ICT should consist of relative comparisons of the institutions that could regulate a particular behavior. Further, because the conduct governed by attorney ethics rules is so wide-ranging and complex, the best institution to regulate one sub-field of attorney conduct is not necessarily the best institution to regulate all such subfields. Thus, a comparison of conduct-regulating institutions should be conducted on a case-by-case, context specific basis, labeled in this Note as "microanalysis."

Combining these features, "comparative institutional choice microanalysis" is an ideal framework for helping scholars and policy makers to improve the effectiveness, efficiency, and consistency of the rules of professional responsibility. Because this framework must be applied independently to particular regulatory contexts, an effective institutional choice microanalysis must revolve around a specific rule or set of rules, as applied in a specific set of circumstances. (16) Therefore, in providing an example of what a "comparative institutional choice microanalysis" might look like, this Note selects one particular regulatory context which has garnered significant attention and controversy in recent years: confidentiality regulations governing an attorney's ability to blow the whistle on a corporate client.

Part I of this Note outlines the theoretical foundation for ICT, tracing its development from the "legal realism" movement of the early twentieth century to its more modern form. It then discusses institutional choice theory's impact on the creation and development of attorney conduct regulations in general, and attorney-whistleblowing regulations in particular. It stresses that this application has so far been rudimentary at best. Part I then introduces a practical framework for applying ICT--comparative institutional choice microanalysis--and discusses how this framework can be applied to analyze the effectiveness of particular attorney conduct regulations from a public policy perspective.

Part II of this Note lays out the basic set of facts required for a thorough institutional choice analysis of attorney whistleblowing regulations...