A good part of the lawyerly trade is learning how to manipulate rules and make fine distinctions—after all, law is an argumentative discipline. But what does that mean within the parameters of what we’re calling the virtuous practice of law? Brad Wendel defends what he calls “the interpretive attitude of professionalism,” by which he means that “in carrying out her client’s lawful instructions, a lawyer has an obligation to apply the law to her client’s situation with due regard to the meaning of legal norms, not merely their formal expression.” Thus, “professionalism stands in opposition to the view of many lawyers that excellence in lawyering means engaging in ‘creative and aggressive’ structuring of transactions for the benefit of clients, even though the transactions are designed to evade regulatory requirements enacted to protect investors.”
Wendel is writing in the context of massive corporate scandals like Enron, in which it was alleged that professionals—lawyers, and even more particularly, accountants—facilitated massive and ultimately ruinous frauds. As illustrative of Enron’s regulatory shenanigans a number of commentators have pointed to a colorful description by an anonymous Enron employee:
"Say you have a dog, but you need to create a duck on the financial statements. Fortunately, there are specific accounting rules for what constitutes a duck: yellow feet, white covering, orange beak. So you take the dog and paint its feet yellow and its fur white and you paste an orange plastic beak on its nose, and then you say to your accountants, 'This is a duck! Don't you agree that it's a duck?' And the accountants say, 'Yes, according to the rules, this is a duck.' Everybody knows that it is a dog, not a duck, but that does not matter, because you have met the rules for calling it a duck."
Nancy Rapoport recounts another classic Enron joke to illustrate the power of cognitive dissonance once it sets in organizationally:
"Enron Capitalism: You have two cows. You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt-equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows. The milk rights of the six cows are transferred through an intermediary to a Cayman Island company secretly owned by the majority shareholder who sells the rights to all seven cows back to your listed company. The Enron annual report says the company owns eight cows, with an option on one more."
Wendel decries these sorts of ruses as an affront to his conception of professionalism because "professionalism, in a nutshell, instructs lawyers not to participate in the hocus-pocus of turning dogs into ducks, and is therefore a principle for regulating the exercise of interpretive judgment."
Wendel makes a couple of useful distinctions that he sees within law practice, but before elaborating on those, I want us to think about an opposition he sets up between "professionalism" and "the Holmesian bad man." In "The Path of the Law," Oliver Wendell Holmes suggests that "a legal duty so called is nothing but a prediction that if a man does or omits certain things he will be made to suffer in this or that way by judgment of the court." Thus, "A man who cares nothing for an ethical rule which is believed and practiced by his neighbors is likely nevertheless to care a good deal to avoid being made to pay money, and will want to keep out of jail if he can." So considered, "If you want to know the law and nothing else, you must look at it as a bad man, who cares only for the material consequences which such knowledge enables him to predict, not as a good one, who finds his reasons for conduct, whether inside the law or outside of it, in the vaguer sanctions of conscience." I've always taken Holmes to be offering a way to describe the content of law and to demark the boundary between legal rules ("law") and other types of rules (moral, ethical, etc.) in a proto-positivist sort of way-not as sanctioning "a bleak vision of professionals as essentially self-interested, amorally pragmatic actors who take a purely instrumental approach to the law." It may well be that some clients are interested in "what they can get away with," but I don't read Holmes' position as a handy rationalization for lawyers who jettison their role as independent counselors.
Returning to the subject of Wendel's two distinctions, he usefully asks us to think of legal interpretation and application in two contexts: litigation and transactional/counseling. I ultimately doubt that the divide is as crisp as Wendel might like, but his is an insight worth close consideration. In litigation, "the responsibility to serve as a custodian of the law is primarily the judge's, with limited coordinate duties on lawyers to avoid advancing frivolous legal arguments, withholding adverse legal authority missed by the adversary, falsifying evidence, or permitting perjury to taint the record." But "transactional and planning situations are distinctive precisely because there is no impartial referee to resist the lawyer's client-centered construction of the law." Let's follow those paths and see where they take us.
As objects of study for future installments in this series, I've chosen RICO and the antitrust laws, in part because I've extensively practiced in and written about both and because both sets of laws present an array of interpretative challenges and attendant strategies that are always present in legal practice, which is to say that these laws are representative, even though their degree of difficulty may be greater than simpler and more straightforward laws. I'm also fronting them because RICO is rarely the subject of counseling (a RICO violation entails a predicate pattern of committing felonies, so the subject is unlikely to come up per se) and structuring transactions so as to stay within antitrust bounds is a non-litigation practice specialty. None of this is to say that the content of law is different in one context rather than the other but rather that the lawyer's interpretive-advocacy license may be dampened outside of litigation. That, at least, is the distinction we're going to test.
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