Back to the Future with Lloyd Cutler

One of the best lawyers I know was packing and unpacking some boxes recently and re-found an article she had read a number of years ago. The Role of the Private Law Firm was written by Lloyd Cutler – a founder of the indigenous Washington law firm Wilmer Cutler & Pickering and counsel to four Presidents, among other things – thirty-five years ago, shortly after Wilmer had quickly grown from 20 to 100 lawyers. He wrote the piece in the Business Lawyer for others in similar firms as a guide to the ethical traps that can arise in a modern legal practice. His core question: how can one structure a law firm of substantial size in a way to minimize ethical quandaries and repeatedly arrive at the best and least problematic answers? The article is well worth reading for a number of reasons. I’d like to note three of its points as particularly relevant for corporate governance or enforcement practitioners.

Board Directorships

Cutler was skeptical of them for lawyers at his firm. He thought they were well qualified to serve as corporate directors, but said, “With a very few grandfathered exceptions, we forbid any lawyer to become a director of any corporation for which we act as principal outside counsel or as securities law counsel.”  After all, how can one act as a clear-eyed advisor essentially to oneself?  It’s a good situation to avoid, but still one that has caught extremely bright and able lawyers. Better to stay out of it entirely.

The “Revolving Door”

Many today, and apparently then, have viewed the “revolving door” between government and private practice as an evil that must be stopped at almost any cost.  In Cutler’s “view, though the ethical question is a serious one, many of the suggested cures are as self-defeating as Prohibition.  They would cost the profession and the country far more than they could possibly achieve of any higher degree of confidence in lawyers and public officials.”  Here are two recently suggested cures that could be disastrous: raise average government salaries to $400,000 and ban former regulators from working for institutions they once policed – forever.  As former FDIC chair Sheila Bair says, “It could change the regulatory mindset.”  It would change the mindset all right. It would change it to one where government staff would have no incentive to ever leave, or to work for a promotion, or do anything besides collect a big check every two weeks. I have a lot of friends in government and don’t really want to advocate against their financial well-being, but boy oh boy.