The Higher Calling: Regulation of Lawyers Post-Enron

This Article discusses some of the inadequacies in the current ethical regulation of the legal system and proposes a new approach to crafting and contextualizing rules of legal ethics. The proliferation of specialties and subspecialties in law practice, together with the inadequacies of prevailing ethics regulation and the vagaries of ethics rules formulations from state to state have not served either the public or the legal profession well. Manipulation, motivated by politics and self-interest, of the ideology of the organized bar to adhere to ethical rules predicated on an antiquated and unrealistic model of a unified legal profession has likewise been counterproductive. Emblematic of the problem is the “one size fits all” nature of the Rules of Professional Conduct and their ill-suitedness to business law, as opposed to litigation, practice, all of which leads to an atmosphere of indeterminacy in the ethical standards applicable to business lawyers. Part I of this article briefly traces the source and nature of the problems facing ethical regulation of the legal profession, briefly highlighting the practical shortcomings of some antidotes proposed by other scholars. Part II examines the various ethical scandals that have plagued the legal profession over the last 35 years. These scandals began with the National Student Marketing case and include the recent string of corporate scandals which brought to light the unethical behavior of corporate insiders, including lawyers and advisors, which ultimately resulted in the passage of the Sarbanes-Oxley Act of 2002. Part III of this Article endeavors to synthesize some insights from public choice theory into the structural shortcomings of the existing attorney regulatory system. From those insights, one would expect state courts and state bar regulatory agencies to be (and, indeed, they have been) co-opted by the elite bar and not adequately regulating those lawyers in corporate and federal regulatory practice including especially those practice areas that affect public investors, public markets, and the economy as a whole. Part IV offers a critique of the current approach to attorney regulation, which has featured piecemeal attempts to federalize legal ethics. Part IV proceeds to illustrate the types of approaches to legal ethics which should be avoided. Finally, Part V concludes with a proposal for a partial federal regulation of legal ethics. The model of partial federal regulation offered is by no means the only, or necessarily the optimal, solution, but hopefully it will spark additional discourse that might lead to a workable system for providing business lawyers with the solid, thoughtful, and objective ethical guidance they need. Consistent with this proposal, Part V identifies and highlights a few areas of ethical concern specifically in need of regulatory attention.