Compliance Elites

33 Pages Posted: 21 Apr 2020 Last revised: 28 Apr 2020

Date Written: April 20, 2020

Abstract

As corporate compliance has expanded its influence within the private sector, so too has the status of those who implement and oversee the firm’s compliance function. Chief compliance officers (CCOs), who are often (but not exclusively) lawyers by training, increasingly boast the types of resumes one associates with elite lawyers. In many ways, this is good news for compliance. There may, however, be several downsides to a strategy of relying so heavily on a cadre of compliance elites. The aim of this Article is to discuss one of these downsides.

High-performing lawyers nurture a potent, yet underexplored, cognitive blind spot. Having performed extremely well under exacting and hierarchical performance regimes earlier in their lives, these perpetual “winners” may be less adept in identifying performance metrics that are unduly severe or prone to induce cheating. Similarly, elite lawyers may be more likely to discount, ex post, the red flags that arise when an employee or organizational unit’s performance is just too good to be true. As compliance matures, the challenge for its top personnel will be to recognize and address these blind spots and hopefully learn from them.

This Article, which was written for Fordham Law School's October 2019 Colloquium on Corporate Lawyers, sets three goals: first, to highlight the emergence of a cadre of elite lawyers within the compliance industry; second, to explore and synthesize the positive aspects of this development; and third, to hypothesize and draw attention to the drawbacks of focusing one’s hiring on the compliance officer’s elite resume. The takeaway is not that firms should eschew the advice of elite lawyers in compliance matters. Rather, it is to pose the suggestion that top performers may not always be best at detecting the misconduct risk generated by systems designed to measure and reward workplace performance.

Keywords: corporate compliance, corporate crime, federal enforcement, organizational wrongdoing, deterrence, behavioral ethics, cognitive bias, cognitive error, corporate lawyering, ethical blindspots

JEL Classification: K14, K22, K23, K42

Suggested Citation

Baer, Miriam H., Compliance Elites (April 20, 2020). Fordham Law Review, Forthcoming, Brooklyn Law School, Legal Studies Paper No. 633, Available at SSRN: https://ssrn.com/abstract=3581025

Miriam H. Baer (Contact Author)

Brooklyn Law School ( email )

250 Joralemon Street
Brooklyn, NY 11201
United States

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