Personhood, Procedure and the Endurance of Corporate Compliance

Research Handbook on Corporate Purpose and Personhood (Elizabeth Pollman and Robert B. Thompson, eds.; Elgar, Forthcoming)

Brooklyn Law School, Legal Studies Paper No. 689

23 Pages Posted: 10 Sep 2021 Last revised: 2 Nov 2021

Date Written: September 8, 2021

Abstract

Over the past century, the Supreme Court has maintained a procedural framework that greatly eases the government’s burden in enforcing the substantive laws that regulate corporations and business entities. Concededly, it is still difficult to hold wrongdoers accountable for business related misconduct. Nevertheless, corporate constitutional procedure is rarely the roadblock preventing government prosecution.

Most of corporate criminal procedure’s ground rules arise of the Constitution’s Fourth and Fifth Amendments. The Supreme Court’s Fourth Amendment decisions permit government enforcers to avoid the costs of seeking and defending search warrants by instead serving broadly worded subpoena requests. Its Fifth Amendment precedents are even more important, as they bar business entities from claiming the privilege against self-incrimination.

As technology reshapes society’s attitudes about government power, these rules are apt to change. Buoyed by the Court’s affirmation of a strong, rights-based vision of corporate personhood, new procedural rules may eventually enable corporate defendants to disempower the government’s procedural tools. This new equilibrium, in turn, will then impact the corporation’s internal policing function, also known as corporate compliance.

For the past three decades, the government has successfully induced corporations to develop internal compliance programs, whose obligations span from policing the company’s employees to inculcating pro-social norms. To the extent compliance improves the firm’s internal governance and operational efforts, there exists good reasons for desiring strong compliance programs regardless of outside pressure. But compliance’s benefits are long-term in nature and difficult to verify. For that reason, outside pressure – in the form of enforcement actions and threatened prosecutions– remains necessary.

The aim of this Chapter is to explore what happens when that outside pressure abates. If constitutional theories of personhood and procedure converge in a way to disable government enforcement institutions, how does the corresponding enforcement gap affect the corporation’s internal policing mechanism? Have corporate officers and employees internalized compliance’s lessons? Or is compliance a highly elastic concept, poised to disappear as soon as enforcement becomes encumbered by procedural hurdles? As I explain in the final part of this Chapter, what we know thus far inspires competing feelings of concern and optimism.

Keywords: corporate personhood, compliance, corporate crime, criminal procedure, collective entity, 5th Amendment, 4th Amendment, subpoenas, ESG, public enforcement

JEL Classification: K14, K22, K42

Suggested Citation

Baer, Miriam H., Personhood, Procedure and the Endurance of Corporate Compliance (September 8, 2021). Research Handbook on Corporate Purpose and Personhood (Elizabeth Pollman and Robert B. Thompson, eds.; Elgar, Forthcoming), Brooklyn Law School, Legal Studies Paper No. 689, Available at SSRN: https://ssrn.com/abstract=3919908

Miriam H. Baer (Contact Author)

Brooklyn Law School ( email )

250 Joralemon Street
Brooklyn, NY 11201
United States

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