Friday, May 3, 2013

Acting Legally, Behaving Ethically

The 1973 movie Paper Chase depicted the brutal image of law school as Professor Kingsfield (actor John Houseman) begins to interrogate students with the Socratic method.  Students are flustered and intimidated by questions, even the most simple ones. Bob Hudak was my 1L Contract law professor, old line and cut from the mold of Kingsfield.  Yet on the first day of class he turned to all of us and said there would be times when he would ask us questions and we would panic.  His advice was to take a deep breath, look us in the eye and then say what makes the most sense.  But more importantly he added, if that is not the right answer then there is something wrong with the law.  His comments forever resonated with me.
    What Hudak was talking about was about the relationship between the law and what political philosopher John Rawls would call our considered moral judgments.  Specifically, the law should in some way support or reflect our deeply held convictions about ethics and justice.  Hudak was not the first to argue that there should be a connection between law and morality.  St. Augustine contended that unjust laws are no laws at all.  Henry David Thoreau protested slavery laws by contending they were unjust, and Martin Luther King, Jr., similarly reached that conclusion when it came to segregation.  All three asserted that  unjust laws lacked a binding moral quality that often  justified civic disobedience.
    But there is a different facet to the relationship between law and morality and it comes in terms of doing the right thing.  It asks not when or whether one has a right to disobey an unjust law but instead whether the law empowers individuals to do what is ethically correct.  Often times individuals may wish to act ethically but are prevented by the law.
    Consider a classic scene from 1994 when the CEOS from the seven major tobacco companies  in the United States testified under oath before Congress.  When asked if cigarettes were unhealthy all said no.  We know they lied.  Internal documents from the tobacco industry proved that.  Yet they  have been legally require to lie.  Under state incorporation laws, they all were under an obligation  to serve the best interests of their business and maximize shareholder value.  Testifying under oath  at a time when thousands of law suits being filed, truthful testimony may have bankrupted their corporations. Lost would have been billions in shareholder value and pensions, untold jobs may have been lost, and many communities devastated.   I suggest to my students that in a perverse way, the law may have required them to lie to Congress.  Of course this is farcical, but it speaks to a gap between ethically what is the right thing to do and what the law may demand.
    But in may situations the law does not always encourage us to do what it ethically correct but instead create incentives to act unethically.  The legal norms of Nazi Germany are the most extreme example.  But across the board one can point to numerous less extreme examples.  For CEOs, decisions to outsource jobs to another country, close a factory and move to avoid pollution laws, taxes, or maximize revenues, or even to agree to a merger may not reflect what is in the best interests of a country, community, or people, but state corporate laws may demand it under threat of shareholder suits.  Public officials may be required to enforce laws they think are unfair, and those working in across many occupations may feel they have no choice but to act unethically because of  the possible legal sanctions that would follow if they were to do what society would regard as correct.
    Economist Milton Friedman most famous essay is his 1970 New York Times “The Social Responsibility of Business Is to Increase Its Profits.”  The title says it all.  Here he denies the capacity and obligation of businesses to act in a socially responsible fashion, instead arguing for the simple duty to maximize shareholder value.  The Friedman essay is one of the most read and influential articles in MBA programs across the United States.  It captures so well a narrow and wooden belief about what businesses should and should not do–and the law reflects those roles.  The law often fails to permit companies to be good corporate citizens and act in an ethical fashion.
    But why is all of this discussion of the law important here?  One of the most fascinating questions to ask is why good people and organizations do bad things?  Why do erstwhile or apparently ethical individuals suddenly act badly?  There are many reasons, but we should not forget the role that the law may play.  There may be circumstances where the law not only fails to support acting ethically but it also discourages it.   Case in point, the initial decision by the Obama administration not to read the accused Boston Marathon bomber his Miranda rights.  The law may have authorized the initial decision due to a Supreme Court created public safety exception, but had the FBI continued to press on with questioning without Mirandizing it would have run adrift of concepts of justice, fairness, and democracy that get dangerously close to the type of questioning many criticized the Bush administration as advocating. Maybe here the law did not necessitate doing the wrong thing, but it should not have facilitated it.
    The law affects behavior in a myriad of complex ways.  But it should not work to encourage unethical behavior.  This was the message that Bob Hudak gave all us law students. It is also a message we should remember when it comes to the construction and management of our society .

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