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January 14, 2022

The Important Role of Business Lawyers as Custodians of the Rule of Law

John H. Stout, Alvin W. Thompson, Winda Chan

“The Important Role of Business Lawyers as Custodians of the Rule of Law” is the sixth article in a series on intersections between business law and the rule of law, and their importance for business lawyers, created by the American Bar Association Business Law Section’s Rule of Law Working Group. Read more articles in the series.

What is the Rule of Law? Different organizations have answered that question using varying formulations. We have been working with the World Justice Project (which was founded in 2006 by William Neukom when he was president of the American Bar Association), which answers that question as follows:

The rule of law is a durable system of laws, institutions, and community commitment that delivers four universal principles:

  • Accountability

    The government as well as private actors are accountable under the law.

  • Just Laws
    The law is clear, publicized, and stable; and is applied evenly. It ensures human rights as well as property, contract, and procedural rights.

  • Open Government
    The processes by which the law is adopted, administered, adjudicated, and enforced are accessible, fair, and efficient.

  • Accessible & Impartial Dispute Resolution
    Justice is delivered timely by competent, ethical, and independent representatives and neutrals who are accessible, have adequate resources, and reflect the makeup of the communities they serve.

The World Justice Project maintains a Rule of Law Index that measures the following nine factors: Constraints on Government Powers; Absence of Corruption; Open Government; Fundamental Rights; Order and Security; Regulatory Enforcement; Civil Justice; Criminal Justice; and Informal Justice.

The Rule of Law is the foundation that supports the pillars of democracy and freedom, and it is in decline in the United States. The World Justice Project’s 2021 Rule of Law Index reflects that our country’s overall score declined, once again, and that our global ranking also declined—and this is in the context of an index that shows the Rule of Law in decline globally. The legal profession must take the lead in strengthening the Rule of Law, and the first step is to acknowledge the magnitude and urgency of the problem, and the consequences of inaction.

“Lack of Civic Literacy Threatens Our Republic” was the title of an opinion piece by Professor David Adler in July 2014. Professor Adler wrote: “The alarming deficit in civic literacy threatens the future of the republic.” He elaborated, “This is not a partisan position or conclusion. Studies and assessments conducted by a variety of organizations, including the conservative Intercollegiate Studies Institute, document a widespread lack of knowledge of politics and government, alienation and apathy, and low levels of civic engagement.”

Professor Austin Sarat, a professor of jurisprudence at Amherst College, found that “among millennials, support for the Rule of Law is even lower than it has been in previous generations: Only 33 percent of people who were born after 1980 believe it is ‘essential to live in a democracy,’ compared to 72 percent of people born before World War II.”

People frequently think of democracy as dying “at the hands of men with guns” but democracies can also die because they “erode slowly, in barely visible steps.” So there is an urgent need to educate the public about our democracy, and at the heart of our democracy is the Rule of Law.

The preamble to the Rules of Professional Responsibility states:

A lawyer, as a member of the legal profession, is a representative of clients, an officer of the legal system and a public citizen having special responsibility for the quality of justice.

So business lawyers, no less than trial lawyers, are officers of the legal system and public citizens having a special responsibility with respect to our system of laws. Also, while people may have a tendency to think about issues related to the Rule of Law in terms of the rights of individuals, businesses benefit from the Rule of Law to no less a degree than do individuals.

When Kenneth C. Frazier was the Chairman and CEO of Merck & Co., Inc., he wrote:

Some may argue that, from a corporation’s perspective, it suffices to focus on business aspects of the law—for instance, a well-functioning patent system for corporations like Merck that depend on patent rights—and that if business law works well, that is enough. Some may posit further that a legal system (by design or not) that has strong institutions for businesses but not for individuals, and particularly not for the disadvantaged, is exactly what corporations should want. Improving the system for others could undermine the advantages to corporations of a system disproportionately favorable to them.

These positions are shortsighted and unrealistic. Certainly, corporations have an interest in the segments of the law that most directly affect them. But while corporations may always place a higher value on advocating for reform and success in those areas, it is not an either-or proposition. A healthy corporation should nevertheless appreciate the extent to which it depends on a well-functioning system as a whole. Effective corporations take that broader perspective. Corporations may have little direct interaction with various segments of the law—family law and the world of indigent criminal defense, among others—but they have just as much at stake as individuals in the fairness of how justice is dispensed. Forward-thinking companies realize that compartmentalized justice is unlikely to work for them or others.

Consequently, the Rule of Law Working Group has as its mission engaging business lawyers and the business community in advancing the Rule of Law. We hope to increase the awareness of business lawyers of their responsibility for maintaining and encouraging support for the Rule of Law, as required under the Rules of Professional Responsibility.

The Working Group would like to get business lawyers actively involved in helping support the Rule of Law, and it is starting an initiative with the goal of doing so.  The Working Group will ask members of the Section to commit to making a presentation to a business client or a business group sometime during the month of May, which has been chosen because May 1 is Law Day.  The Working Group will provide support for members who commit to making such a presentation.  More details about this initiative will be coming soon.

For the Rule of Law Working Group,

John H. Stout, Co-Chair
Alvin W. Thompson, Co-Chair
Winda Chan, Vice Chair

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    John H. Stout

    Fredrikson & Byron PA

    John Stout practices in business organization, finance, and governance at Fredrikson & Byron PA, a law firm headquartered in Minneapolis, with other offices in St. Paul and Mankato, Minnesota, Iowa, North Dakota, Mexico, and China.  John works with start-up, and early stage businesses on organizational, finance and various business matters.  

    Alvin W. Thompson

    United States District Judge

    Alvin W. Thompson serves as a United States District Judge for the District of Connecticut. He was appointed in October of 1994, after 16 years in private practice with Robinson & Cole, in Hartford, Connecticut.

    Winda Chan

    Cassels Brock & Blackwell LLP

    Winda Chan is an associate in the Banking & Specialty Finance Group at Cassels Brock & Blackwell LLP. Winda advises on a variety of corporate transactions, corporate commercial finance matters, project financings, real-estate backed and syndicated loans, secured and unsecured lending, and domestic and cross-border lending transactions. Winda is a member of both the British Columbia and Ontario bar and is a Business Law Fellow of the American Bar Association.