WHITE COLLAR CRIMELecture 13: Policing & Regulating White Collar Crime

Private Policing

• Why?

oPublic police do not have time to investigate.

oProtection of business assets (e.g., preventing loss)

oAvoidance of bad publicity

• Objective is recovery, not punishment.

• Self- Regulation: a form of private policing directed at one’s own company or professional peers.

oUseful b/c government does not enough resources/expertise to fully regulate all activities.

Role of Lawyers

• American Bar Association (ABA): a voluntary bar association of lawyers and law students. The ABA formulates model ethical codes related to the legal profession.

• Important prohibitions: misrepresentation of facts, intentionally offering false evidence, furtherance of fraud.

• Conflict between duties to client and obligation as officer of the court.

• Lawyers have a duty to disclose a client’s conduct that is known to be illegal.

Role of Paralegals

• National Federation of Paralegal Associations, Inc. (NFPA): the oldest and largest organization of paralegals in the country.

• According the www.paralegals.org, “NFPA has been the national voice for the paralegal profession since 1974.”

Paralegals also should uphold high ethical standards:

oModel Code of Ethics and Professional Responsibility adopted by NFPA in 1993.

o In 1997, NFPA adopted Model Disciplinary Rules and combined them with the Model Code of Ethics and Professional Responsibility to create the Model Code of Ethics and Professional Responsibility and Guidelines for Enforcement.

o Available at www.paralegals.org.

• Hot Topic:

o The unauthorized practice of law:

“ FPA believes, as do many attorneys, that there may be areas in which a license to practice law is not required to perform certain legal functions. However, until such time as these areas are defined and determined to be permissible activities, NFPA believes paralegals should not perform these functions and does not support paralegals engaged in the unauthorized practice of law.”

o Likely activities constituting the unauthorized practice of law: accepting clients, setting legal fees, giving legal advice, representing others in court.

oNFPA has urged an examination of areas in which paralegal roles may be enhanced without violating the rule.

oParalegal Responsibilities: delineates current paralegal tasks in various specialty practice areas and a few general areas. Available at www.paralegals.org.

• NFPA Ethics Board

Role of Accountants

• Conflict between obligation to client and duty to discover fraudulent activities.

• Responsible for detecting managerial misrepresentation that would produce misleading financial statements (if detected by GAAP).