Abstract

http://ssrn.com/abstract=876125
 
 

Citations (4)



 
 

Footnotes (559)



 


 



The Banality of Fraud: Re-Situating the Inside Counsel as Gatekeeper


Sung Hui Kim


UCLA School of Law


Fordham Law Review, Vol. 74, No. 983, 2005

Abstract:     
In this article, the author provides a social-psychological explanation for why inside counsel (in-house or corporate counsel) may compromise their ethical obligations or professional duties and acquiesce in managerial misconduct, sometimes amounting to fraud. This social-psychological explanation focuses on the situation that inside counsel finds herself in (as mere employee, as faithful agent, and as team-player), as well as the cognition, incorporating recent psychology studies and recent theories (e.g., dual processing model of cognition) on how the human mind might resolve ethical dilemmas. It also critiques the Sarbanes-Oxley Act of 2002 and the 2003 amendments to the Model Rules of Professional Conduct in their attempts to address this problem. Finally, it provides a possible solution to this problem based closely on its social-psychological diagnosis. The proposed solution includes: (i) public companies transferring the oversight of the corporate legal department to a committee of independent board members, (ii) the law guaranteeing whistleblower protection to inside counsel under Sarbanes-Oxley and, accordingly, permitting the disclosure of client confidences under any claim of retaliatory discharge; and (iii) public companies limiting ex ante the amount of equity investments that an inside lawyer may accept as compensation or, in the alternative, fashioning equity compensation in a manner that minimizes potential conflicts of interest. In analyzing the problem, it employs a narrative of the experience of Mark Belnick, former general counsel of Tyco, who was prosecuted and finally acquitted in New York on charges of falsification of business records.

Number of Pages in PDF File: 95

Keywords: banality, fraud, gatekeeper, inside counsel, in-house counsel, corporate counsel, social psychology, cognitive psychology, Sarbanes-Oxley, corporate governance, Model Rules of Professional Conduct, professional responsibility, lawyers, Tyco, Mark Belnick, SEC

Accepted Paper Series


Download This Paper

Date posted: January 23, 2006  

Suggested Citation

Kim, Sung Hui, The Banality of Fraud: Re-Situating the Inside Counsel as Gatekeeper. Fordham Law Review, Vol. 74, No. 983, 2005. Available at SSRN: http://ssrn.com/abstract=876125

Contact Information

Sung Hui Kim (Contact Author)
UCLA School of Law ( email )
385 Charles E. Young Dr. East
Room 1242
Los Angeles, CA 90095-1476
United States
Feedback to SSRN


Paper statistics
Abstract Views: 2,730
Downloads: 427
Download Rank: 37,180
Citations:  4
Footnotes:  559

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo4 in 0.219 seconds