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Getting (Too) Comfortable: In-House Lawyers, Enterprise Risk and the Financial Crisis

29 Pages Posted: 23 Nov 2011  

Donald C. Langevoort

Georgetown University Law Center

Date Written: November 22, 2011

Abstract

In-house lawyers are under considerable pressure to "get comfortable" with the legality and legitimacy of client goals. This paper explores the psychological forces at work when inside lawyers confront such pressure by reference to the recent financial crisis, looking at problems arising from informational ambiguity, imperceptible change, and motivated inference. It also considers the pathways to power in-house, i.e., what kinds of cognitive styles are best suited to rise in highly competitive organizations such as financial services firms. The paper concludes with a research agenda for better understanding in-house lawyers, including exploration of the extent to which the diffusion of language and norms has reversed direction in recent years: that outside lawyers are taking cognitive and behavioral cues from the insiders, rather than establishing the standards and vocabulary for in-house lawyers.

Keywords: lawyers, ethics, financial crisis

JEL Classification: K22, K00

Suggested Citation

Langevoort, Donald C., Getting (Too) Comfortable: In-House Lawyers, Enterprise Risk and the Financial Crisis (November 22, 2011). Georgetown Law and Economics Research Paper No. 11-27; Georgetown Public Law Research Paper No. 11-135. Available at SSRN: https://ssrn.com/abstract=1932398

Donald Langevoort (Contact Author)

Georgetown University Law Center ( email )

600 New Jersey Avenue, NW
Washington, DC 20001
United States
202-662-9832 (Phone)
202-662-9412 (Fax)

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