More Behavioral Lessons from the Dewey Downfall

The Dewey & LeBoeuf implosion and subsequent criminal indictments have been all the rage in legal circles, raising a number of intriguing issues – including the decision by Manhattan DA Cyrus Vance to bring the full weight of his office against a low-level former Dewey employee who, while working as federal clerk, has been twice indicted in the case, and Vance’s decision not to disclose the deals of the seven ex-Dewey employees who have already pled guilty in the case (all of which have been subsequently unsealed by court order). Some of the behavioral aspects of the case have been discussed by Nancy Rapoport, whose forthcoming article in the St. Mary’s J. L. Ethics & Malpractice addresses the cognitive biases and blind spots that may have led to the firm’s demise.

Now comes another perspective that raises important questions for behavioral legal ethics: does Dewey’s downfall demonstrate the need for Big Law (and other law firms) to take a compliance approach when developing an ethical infrastructure? Donna Boehme, the compliance columnist for Corporate Counsel (free registration required), concludes that the answer is yes — arguing that many of the same risk factors that exist in the corporate world also apply to Big Law (her top ten reasons why the compliance model should be adopted by law firms is here).

From a behavioral science perspective, what is fascinating is that the compliance world seems to be taking seriously the role that behavioral ethics can play in creating an ethical culture. Indeed, Boehme prominently cites Bryan Cave partner Scott Killingsworth, the leading voice advocating for a behavioral approach to compliance issues (His GJLE article, entitled Modeling the Message: Communicating Compliance Through Organizational Values and Culture, has been downloaded on SSRN 2147 times by last count!).

In a nutshell, Killingsworth argues that organizations that promote and communicate implicit ethical values are more likely to successfully foster compliance with ethical norms than those that rely exclusively on traditional “command-and-control” models (such as fear of punishment and/or other explicit incentives for compliance). Along the way, he discusses the role of priming, framing, obedience to authority, procedural justice, the slippery slope, and many other aspects of behavioral ethics. His work also relies heavily on empirical work of leading researchers such as Dan Ariely, Tom Tyler and Linda Trevino, among others (Killingsworth also specifically highlights Giving Voice to Values, a program developed by Mary Gentile who previously taught for ten years at Harvard Business School (for more about GVV, there is an excellent series of videos and additional material available at Ethics Unwrapped).

So how might Killingsworth’s recommendations have helped in the Dewey case? To take but one example, he notes that organizations that promote the intrinsic motivation of employees to act ethically are more likely to produce voluntary disclosure of violations than organizations where such attributes are missing. Coming back to the Dewey example, would the fraud that is alleged to have contributed to the firm’s downfall been discovered and reported much earlier if the employees with insider knowledge felt comfortable disclosing it? (Boehme makes a similar point: “A compliance program, tailored to the law firm structure, could have given those seven Dewey employees a safety valve. If just one of them had sounded the alarm at the beginning instead of quietly acquiescing, the story might have taken a different turn.”).

Others will debate whether the Dewey case  is a warning bell for how other large firms operate, including those who disagree that it portends similar egregious misconduct by other members of Big Law.  But to the extent that this debate involves inquiry into how firms facing economic uncertainty should reinforce the importance of an ethical culture within their infrastructure, it is heartening to know that there is a well-developed behavioral approach that can – and should — be part of the discussion.

[update:  4/7/14:  For more discussion of the role of behavioral ethics in the world of business compliance, see this string of posts from Jeff Kaplan, the editor of conflictofinterestblog.com]

[update #2: 6/2/14:  Jeff Kaplan has indexed all of his posts regarding behavioral ethics at the conflictsofinterestblog.com here]

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A Journey from Psychology to Law to Ethics

I didn’t start out asking questions about ethics. I started out wanting to study how humans’ behaviors affected other humans’ behaviors. That’s how I ended up in a PhD program in Social Psychology at the University of Virginia. I was enthralled with the work I did while I was in that program, particularly when I became involved with research in social cognition. But I had little patience for the myopic approach to the application of the findings. We seemed content with research that was relevant only in the bowls of Gilmer Hall, where the psychology faculty, graduate students, and undergraduate research assistants met weekly to discuss on-going and future research studies. I was acutely aware that a study on the helping behavior of 146 college undergraduates under high and low cognitive load was only interesting to other psychology PhDs, unless we could make a case that it mattered, I mean, it mattered to someone besides us and others doing virtually the same kind of work.

So, I went to law school. But because I was still finishing up my six-year graduate program, I was still making frequent trips to Gilmer Hall, even as I was preparing my oral argument for Trial Advocacy. In short, I had a foot in both worlds. It was an eye-opening experience. I was horrified by the casual way my Psych colleagues would suggest dispensing with, or entirely upending rules of evidence, rules of procedure, and practices based upon the Constitution (and settled by our highest Court). I was likewise shocked and dismayed by the myriad assumptions upon which our legal system is built; many of them had been empirically demonstrated to be inapposite. Mostly what I found distressing was the ignorance of one field for the other. Needless to say, the time I spent driving back and forth from the law school to the psychology department at UVA was a period of much dissonance for me.

Although I was only vaguely aware at the time, I was not alone in my voyage. Hundreds of PhD/JD psychology and law types were engaged in some stage of schooling or academia along with me. Many had come before and were already out there doing ground-breaking work, and forging a path for future research. Both fields have benefitted immensely from efforts by those with knowledge of the foci and methodologies of each to bring them together. My writing and teaching continues to be an outlet for the dissonance I still experience when I teach doctrinal courses.

More recently, my thinking about how behavioral research should inform legal rules and practices has gained a new dimension. I see a common thread in much of the scholarship I see, and it is ethics. In a way, this is unsurprising. I always start my first-year, first-semester Torts class by encouraging student to think about law as the mechanism by which we govern human interaction. We talk about the social contract and I ask them to describe “good” society, and then to think about what they know about law and how law “works” to enforce the social contract and to increase common good. These are themes throughout the course. Conversation about law as a deterrent of bad actions and a reinforcer of desirable behavior is often, I’ve found, devoid of any discussion of ethics or morality. Law is instrumental, morality is not. Morality—good ethical practice—exists on its own as a kind of exogenous virtue. Certainly, we might create rules that require “ethical” practices, but that is really just about using laws (or standards) in an instrumental way, in the same way we use speed limits to encourage safe driving.

I have come to believe that many discussions about law and policy would benefit from a straight-forward, integrated consideration of ethical implications of various choices we might make. Why? Because at bottom, our expectations about how human beings should behave derive from our most basic sensibilities—our affective, moral judgments, and all law can ultimately be distilled from this.

For example, ethical considerations are clearly implicated in the way in which political campaigns are financed. In my writing about the Supreme Court decision in Citizens United, the case in which the majority on the Court held that Corporations should be permitted to spend unlimited amounts of money on political advocacy, Justice Kennedy balanced First Amendment freedom of speech concerns against the concerns about the power of corporations with millions of dollars to spend for or against candidates who might advance corporate or industry objectives. Kennedy’s opinion referenced ethical considerations only implicitly. That is unfortunate. Consideration of the ethical basis for free speech might provide a clearer sense for what is at stake when we privilege that good at the expense of preventing corrupting influences in our political system. Similarly, corporate campaign spending should start with the question of what a corporation should and should not ethically be able to do to influence an election.

Ethical questions about law and policy invariably raise psychological questions. How is unethical behavior likely to shape attitudes or behaviors? What features of the environment influence people to behave ethically or unethically? How best can we encourage ethical practices? Under what circumstances do people behave unethically by strategically exploiting known cognitive or attributional tendencies. Even our thinking about ethics and the factors that determine whether we apply an ethical framework to legal problems are ultimately questions about human psychology.

I am looking forward to future discussions about behavioral legal ethics. I imagine that this forum will provide a rich source of thoughtful conversations, and hopefully, it will spotlight the many ways that behavioral and ethical considerations can inform law and policy.

The Psychology of Legal Ethics

Friends of the blog Michael T. Colatrella Jr., Catherine Gage O’Grady, Andrew M. Perlman, Nancy Rapoport, Randy D. Gordon, Jan L. Jacobowitz, and Scott Rogers presented a panel on The Psychology of Legal Ethics at the first Psychology and Lawyering conference at UNLV Law School on February 21, 2014.

Panel 5 – Legal Ethics – 2.21.14 from William S. Boyd School of Law on Vimeo.

Teaching about the Slippery Slope

This is my first year teaching the core aspects of Behavioral Legal Ethics in my professional responsibility class. It has been a fascinating experience – the students, from what I can tell, seem engaged and I find my own knowledge of the material deepening daily. So, I’ll be posting some of my ruminations, reflections, etc. about the experience – probably in no particular order.

Here’s one:

I teach using Lisa Lerman & Philip Schrag’s Ethical Problems in the Practice of Law, which provides a rich source of material to address BLE concepts in almost every class. For example, we just discussed various aspects of unethical billing practices (padding, double billing, outright fraud, etc.). The book introduces this discussion with an excerpt from Patrick Schiltz’s sobering article, entitled “On Being a Happy, Healthy and Ethical Member of an Unhappy, Unhealthy and Unethical Profession.” This just may be the best description I’ve seen of the well-documented phenomenon often called the slippery slope (for research on the slippery slope, see here, here and here; there is also an excellent summary on pages 1118-19 of Behavioral Legal Ethics).

Here’s an excerpt from page 917 of Schiltz’s article:

Let me tell you how you will start acting unethically: It will start with your time sheets. One day, not too long after you start practicing law, you will sit down at the end of a long, tiring day, and you just won’t have much to show for your efforts in terms of billable hours. It will be near the end of the month. You will know that all of the partners will be looking at your monthly time report in a few days, so what you’ll do is pad your time sheet just a bit. Maybe you will bill a client for ninety minutes for a task that really took you only sixty minutes to perform. However, you will promise yourself that you will repay the client at the first opportunity by doing thirty minutes of work for the client for “free.” In this way, you will be “borrowing,” not “stealing.”

And then what will happen is that it will become easier and easier to take these little loans against future work. And then, after a while, you will stop paying back these little loans. You will convince yourself that, although you billed for ninety minutes and spent only sixty minutes on the project, you did such good work that your client should pay a bit more for it. After all, your billing rate is awfully low, and your client is awfully rich.

And then you will pad more and more–every two minute telephone conversation will go down on the sheet as ten minutes, every three hour research project will go down with an extra quarter hour or so. You will continue to rationalize your dishonesty to yourself in various ways until one day you stop doing even that. And, before long–it won’t take you much more than three or four years– you will be stealing from your clients almost every day, and you won’t even notice it.

I also showed the students this video, which provides a nice example of the slippery slope in action (albeit not in a legal context).

Next year I plan to include the excerpt from the Schiltz article earlier in the semester (I don’t know if I’ll assign the entire article, as I tend to agree with those who think it lacks some balance on other aspects of life in Big Law).

More ruminations to come . . .

[7/01/14 Update: here is a fascinating new study on the power of the slippery slope to produce unethical behavior].

BLE In the Classroom, Part 1

Over the past few years I have tried a variety of approaches to incorporating behavioral legal ethics into my Legal Ethics and Professional Responsibility class. A few years ago I assigned Carol Tavris and Eliot Aronson’s Mistakes Were Made (but Not by Me) as a supplemental text to my casebook. A few students appreciated it, but most seemed to view it as irrelevant psychobabble, and halfway through the semester I dropped the remaining readings from Tavris and Aronson. This semester I’m trying again, with a focus on the behavioral ethics and conflicts of interest.

I’ve found conflicts of interest to be the hardest part of the class to teach, or at least the part where students are most resistant. Some students, at least, seem to have a very hard time getting their minds around the idea of having to turn down or withdraw from a representation. Part of this, I think, is because of students’ fears about making a living in the current legal market. Turning down a paying client sometimes seems to be too much to ask. Cognitive biases like hyperbolic discounting, self-serving bias, or the endowment effect might themselves also play a part in students’ overvaluing of the immediate rewards of fees over the risk of disciplinary sanctions. My working hypothesis is that students’ and lawyers’ assessment of conflict of interest problems and the degree of communication required to obtain informed consent are areas where an understanding of behavioral ethics can be especially valuable. So I soldier on.

Last week I introduced conflicts of interest with the aid of the Bounded Ethicality and Fundamental Attribution Error videos from The University of Texas at Austin, McCombs School of Businss Ethics Unwrapped series.

Last night I continued the discussion of material limitation conflicts under Rule 1.7(a)(2) with a TEDTalk on Optimism Bias by Dr. Tali Sharot of University College London’s Faculty of Brain Sciences:

I wanted my students to think about flawed assessment of the risk of conflicts arising where they may not be obvious at the inception of the representation. As we worked through the problems in the casebook (Lisa G. Lerman & Philip G. Schrag, Ethical Problems in the Practice of Law), I occasionally warned the students when they were viewing a situation through “big optimism glasses,” and reminded them to put their “pessimism glasses” on to think about the likely problems of joint representation of criminal co-defendants or family members. It’s too early to tell how well it worked, but I think the images of “optimism glasses” and “pessimism glasses” provided a useful tool for analysis.

New on SSRN: Epistemics at Work: The Theory of Mind in Principal-Agent Relations

An interesting working paper that offers a useful perspective on allocation of decision making between lawyer and client.

Epistemics at Work: The Theory of Mind in Principal-Agent Relations

Stefan Linder, ESSEC Business School

Nicolai J. Foss, Copenhagen Business School – Department of Strategic Management and Globalization

Diego Stea, Copenhagen Business School – Department of Strategic Management and Globalization

February 24, 2014

Abstract: 

Agency theory studies the impact of and remedies to asymmetrically distributed information in principal-agent relations. Yet, it does so in a surprisingly binary manner: it assumes the principal to be perfectly knowledgeable of some pieces of information (such as the agent’s risk aversion), while others (such as the agent’s true effort exerted) are considered to be perfectly private information of the agent. Agency theory thus makes very asymmetrical assumptions about the knowledge of principals and agents, largely neglecting the human capacity for interpersonal sense-making. This chapter explores the implications of instilling agency theory with a more realistic account of the human capacity to read other people’s desires, intentions, knowledge, and beliefs — that is, to have a theory of someone else’s mind.