Business Ethics Scorecard

From Ezra Klein:

A new global survey from Ernst & Young finds that companies are more likely to use cash bribes in hopes of improving their performance than they were two years ago: 15 percent of respondents (who included some firms’ chief financial officers) said they are willing to make cash bribes, compared to 9 percent in E&Y’s 2010 survey.

 

Similarly, 5 percent said they “might misstate financial performance” to make themselves look better, compared to 3 percent in the last survey. Ernst & Young explains that bribery and other corrupt practices are significantly more likely to happen in “rapid-growth markets” in the developing world, pointing out that 39 percent of survey respondents said that bribery and corruption occurs frequently in their countries.

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More barriers to entry into the shrinking legal services market

Ben Trachtenberg points out the failings in New York’s new pro bono legal service prerequisite for bar admission in today’s New York Times:

Mandatory pro bono work for lawyers is a good idea. But Judge Lippman’s plan is deeply flawed, as it affects only aspiring lawyers who have not yet gained admission to the bar. As a result, the beneficiaries of Judge Lippman’s largess will be served by people unlicensed to practice law — who by definition have no real practice experience. (Though internships and law school clinics are useful training grounds for future lawyers, they are no substitute for the rigors of licensed practice.)

The Lippman plan hurts these budding lawyers most of all. Recent law school graduates face a growing employment crisis: the Law School Transparency Data Clearinghouse lists 67 schools (out of the 185 that were scored) with full-time legal employment rates below 55 percent. At the same time, law school tuition and student debt have skyrocketed. The average 2011 law graduate from Syracuse owes $132,993, not including any debt incurred for undergraduate education. At Pace, the figure is $139,007; at New York Law School, $146,230.

After commencement, things get worse. Law graduates often borrow more money for bar preparation, to pay for both living expenses and prep courses, which can cost more than $3,000. Even graduates with good jobs lined up face tight summer budgets; many work in retail or food service to make ends meet, as do many law students. The irony is that many recent law graduates may well qualify for the free legal services Judge Lippman will bestow on New York’s poor. It is from these struggling New Yorkers that Judge Lippman demands over a week’s unpaid labor.

In case you have a need for even more sobering news, LegalZoom has filed for an initial public offering.  Richard Granat illuminates the dent in small-firm revenues that LegalZoom may be creating:

LegalZoom’s data in the S-1 filing is now available for everyone to analyze:

  • In 2011, 490,000 orders were placed through their web site;
  • 20% of all limited liability companies in California were done by LegalZoom;
  • During the past ten years, LegalZoom has served over 2,000,000 customers.
  • Revenue in 2011 was $156 million.

These are impressive statistics and provide support for the proposition that consumers and small business prefer a very limited legal solution that is just good enough to get the job done, rather than pay the high legal fees charged by the typical attorney.

Bounded Ethicality

Over the past couple of decades, psychologists have documented many different ways that our minds fail to see what is directly in front of us. They’ve come up with a concept called “bounded ethicality”: That’s the notion that cognitively, our ability to behave ethically is seriously limited, because we don’t always see the ethical big picture.

One small example: the way a decision is framed. “The way that a decision is presented to me,” says Tenbrunsel, “very much changes the way in which I view that decision, and then eventually, the decision it is that I reach.”

Essentially, Tenbrunsel argues, certain cognitive frames make us blind to the fact that we are confronting an ethical problem at all. …

“If you’re thinking about a business decision, you are significantly more likely to lie than if you were thinking from an ethical frame,” Tenbrunsel says.

According to Tenbrunsel, the business frame cognitively activates one set of goals — to be competent, to be successful; the ethics frame triggers other goals. And once you’re in, say, a business frame, you become really focused on meeting those goals, and other goals can completely fade from view.

From NPR.

New Pro Bono Requirement Prior to New York Bar Admission

As if the $130,000+ law school price tag and horrific job market were not enough of a deterrent for would-be lawyers.

Starting next year, prospective lawyers must show that they have performed at least 50 hours of law-related pro bono service before being admitted to the New York state bar, Chief Judge Jonathan Lippman announced yesterday.

The chief judge said in his annual Law Day address at the Court of Appeals that the requirement would serve a two-fold purpose: It would address the large, unmet need for lawyers to represent the poor and it would inculcate in aspiring lawyers a career-long duty to serve the public.

“If pro bono is a core value of our profession, and it is—and if we aspire for all practicing attorneys to devote a meaningful portion of their time to public service, and they should—these ideals ought to be instilled from the start, when one first aspires to be a member of the profession,” Lippman said to a crowd of judges, lawyers and legislators.

(Emphasis added). More here.