The Limits of Gatekeeper Liability

23 Pages Posted: 20 Apr 2017

See all articles by Andrew F. Tuch

Andrew F. Tuch

Washington University in St Louis - School of Law; European Corporate Governance Institute (ECGI)

Date Written: April 3, 2017


Gatekeeper liability – the framework under which actors such as law firms, investment banks and accountants face liability for the wrongs committed by their corporate clients – is one of the most widely used strategies for controlling corporate wrongdoing. It nevertheless faces well-recognized flaws: gatekeepers often depend financially on the clients whose conduct they monitor; to carry out their gatekeeping function, gatekeepers rely on individuals – often their employees – whose interests diverge from their own; and major transactions typically involve multiple gatekeepers, each with specific areas of expertise and information, which produces both gaps and overlaps in the gatekeeping net.

In this paper, I assess a recently proposed strategy intended to address the core challenges that afflict gatekeeper liability. Proposed by Professor Stavros Gadinis and Mr. Colby Mangels in "Collaborative Gatekeepers," 73 Wash. & Lee L. Rev. 797 (2016), the strategy would require gatekeepers to report their suspicions of wrongdoing by their clients to regulators – a duty that is analogous to rules that have proven effective in anti-money laundering regulation. I assess the proposal’s likely effectiveness by, first, distinguishing it from conventional gatekeeping regimes. I argue in favor of the proposal but suggest that its success is likely to depend on the particular ways in which it interacts with conventional gatekeeper regimes – because the proposal would be overlaid on these existing regimes, rather than amending or replacing them. I also examine the basic difficulty in justifying any gatekeeper liability regime that stems from the need to establish its superiority over more direct forms of liability – namely, individual and enterprise liability – a task that hinges on the satisfaction of numerous complex conditions that cannot be established – easily, or at all (at least to the satisfaction of those inclined to oppose new liability regimes). Arguing that the Gadinis–Mangels proposal nevertheless holds strong promise, I suggest an extension designed to overcome defects associated with the fragmentation of the gatekeeping net that results from the presence of multiple gatekeepers in major business transactions.

Keywords: Gatekeepers, Gatekeeper Liability, Optimal Deterrence Theory, Liability of Underwriters, Securities Fraud, Conflicts of Interest, Corporate Liability, Collaborative Gatekeepers, Multiple Gatekeepers

JEL Classification: G24, K10, K22

Suggested Citation

Tuch, Andrew F., The Limits of Gatekeeper Liability (April 3, 2017). 73 Wash. & Lee L. Rev. Online 619 (2017), Washington University in St. Louis Legal Studies Research Paper No. 17-04-01, Available at SSRN: or

Andrew F. Tuch (Contact Author)

Washington University in St Louis - School of Law ( email )

One Brookings Drive
Saint Louis, MO 63130
United States

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
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1000 Brussels

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