While shaming may serve as a more effective deterrent, and hence a viable substitute for regulation, when it comes to lawyer marketing excesses, it’s not the best solution in all instances. At the WSJ Law Blog, Ashby asks whether shaming is the new punishment for corporate crime:
Last June, we blogged about an interesting sentence handed down by a New York federal judge — he ordered a former pharma executive convicted of making false statements to regulators to write a book about his experiences connected to the case.
Is the shaming movement catching on? According to a recent NPR story, the answer might be yes — and shaming might be moving into the corporate arena. According to the story: “Increasingly, companies that plead guilty to crimes that harm the community — polluting, for example — are being required to publish an apology as part of their punishment.”
While Judge Urbina hasn’t moved from Washington to New York as far as I’m aware, and a pharma executive isn’t the same as a corporation, the former wearing pants and the later wearing pro formas, the point is still noted. The problem, of course, is that punishments that may well be effective for individuals simply don’t apply well to corporations, or have the desired deterrent effect.
At Business Law Prof, Stefan Padfield doubts that shaming will do the trick.
At Business Law Prof, Stefan Padfield doubts that shaming will do the trick.
Personally, I have been unimpressed by the idea of shaming as an effective form of deterrence or punishment ever since I heard the comments of a Big Corp board member effectively affirming what I had long believed to be true: That at least for the top execs, they’ll gladly take your shame all the way to the bank. They don’t live in the same circles as the rest of us and they are about as impacted by our scorn as I would be by the disapproval of my cat (actually, I hate when my cat views me with disdain–so that’s not a great example). Now, I can’t remember the source of the comment so I have to submit it as apocryphal. But my point is nicely summarized by a comment I received from someone else in connection with this story: “Really? Who is supposed to be ‘ashamed’? The entity itself? The people who run it (and who can simply move on)? I am very dubious.”
This lays out the problem fairly well. Corps can’t be imprisoned, and the rest of management is happy as a clam to see some COO take a bullet for the team. They will feel terrible about it for hours, but they’ll get over it. An apology, or book, or public service ad? No problem. They’ll give you two, if it means they get to skate. Shame? There’s no shame to be had. Sure, they would prefer nothing, but they will trade off the prosecution for shame any day of the week. For corporations, this is just a businesses judgment. Unlike individuals, there’s nothing personal about it.
While Padfield equivocates, as lawprofs occasionally do, on shaming, he defaults to fines and imprisonment:
While Padfield equivocates, as lawprofs occasionally do, on shaming, he defaults to fines and imprisonment:
Ultimately, this is an empirical question. And I am certainly willing to be convinced that shaming has an effective role to play in the punishment of corporate offenders (both as to the corporate entity and the individuals who run it). But for now, if more punishment is actually warranted I’d prefer to see more jail time or fines.
Fines don’t cut the mustard, as Judge Rakoff made clear in the Bank of America settlement. Money is what corporations gain and lose, and a criminal penalty is just another line on a statement. More importantly, the people who run corporations aren’t the people who have to pay the fine; no money is taken from their pockets. The folks who pay are the shareholders, who have absolutely no say in the corporate decisions that gave rise to the wrongdoing. To the extent it’s a good smack, it’s the wrong face.
The jail time alternative is interesting. How big a cell do you need to keep a corporation on ice? One big enough to hold a sheet of paper, since corporations are paper entities. Executives or directors are one thing, but they aren’t the corporation. Just regular guys in a custom made suit with golden parachutes. You know, like you or me.
One substitute often suggested is that management and the board of a corporation engaged in criminal conduct, where the crime can’t be attributed to any particular individual (as is often the case), share in the pain. The problem here is that it’s an imposition of criminal punishment on people who’ve not been proven to have committed a crime or had the opportunity to defend themselves. It’s just one of those little details that are system won’t permit, even if we prefer to have those closer to the source of the crime suffer in the place of those who had nothing to do with it.
It’s a problem.
The fact is that the law has yet to craft a punishment that applies well across the board to corporate crime. While one may work under certain circumstances, it’s rarely the solution for all situations. Often, there are individuals prosecuted simultaneously, and any of the normal sentencing options serve their purpose. But this does nothing to deter the corporate entity from engaging in wrong, as long as there is another executive sitting around who can be thrown under the bus for the sake of the company. As much as executives and directors believe that everyone else down the hallway loves them dearly, when push comes to shove in corporate investigations and prosecutions, they are all too willing to watch their golf buddy go down the tubes in order to preserve the corporation. They will toast to their memory at the club. Adieu, good soldier.
Which brings us back to shaming as a deterrent. Ultimately, the question isn’t what sentence is the most effective,or satisfies the purposes of 18 USC 35539(a), but what is the least problematic with at least some hope of having a deterrent effect. The real problem isn’t with the absence of having a viable sentence available, but with the concept of holding a legal entity, a corporation, responsible for criminal conduct. Crimes only work with real people. And that’s the real shame.
The jail time alternative is interesting. How big a cell do you need to keep a corporation on ice? One big enough to hold a sheet of paper, since corporations are paper entities. Executives or directors are one thing, but they aren’t the corporation. Just regular guys in a custom made suit with golden parachutes. You know, like you or me.
One substitute often suggested is that management and the board of a corporation engaged in criminal conduct, where the crime can’t be attributed to any particular individual (as is often the case), share in the pain. The problem here is that it’s an imposition of criminal punishment on people who’ve not been proven to have committed a crime or had the opportunity to defend themselves. It’s just one of those little details that are system won’t permit, even if we prefer to have those closer to the source of the crime suffer in the place of those who had nothing to do with it.
It’s a problem.
The fact is that the law has yet to craft a punishment that applies well across the board to corporate crime. While one may work under certain circumstances, it’s rarely the solution for all situations. Often, there are individuals prosecuted simultaneously, and any of the normal sentencing options serve their purpose. But this does nothing to deter the corporate entity from engaging in wrong, as long as there is another executive sitting around who can be thrown under the bus for the sake of the company. As much as executives and directors believe that everyone else down the hallway loves them dearly, when push comes to shove in corporate investigations and prosecutions, they are all too willing to watch their golf buddy go down the tubes in order to preserve the corporation. They will toast to their memory at the club. Adieu, good soldier.
Which brings us back to shaming as a deterrent. Ultimately, the question isn’t what sentence is the most effective,or satisfies the purposes of 18 USC 35539(a), but what is the least problematic with at least some hope of having a deterrent effect. The real problem isn’t with the absence of having a viable sentence available, but with the concept of holding a legal entity, a corporation, responsible for criminal conduct. Crimes only work with real people. And that’s the real shame.
Discover more from Simple Justice
Subscribe to get the latest posts sent to your email.
Why not the equivalent of corporate jail – an injunction? The corporation can stopped from transacting new business for a period of time and can thereafter be placed under the watch of a receiver.