Every fall, I teach a three-hour lecture course called “Corporate Crimes” at the University of Iowa College of Law. I always start the first class in the same way: “Forget everything you thought you learned as a 1L about how criminal justice works, or, more importantly, doesn’t work. When you enter this classroom, you step through the looking glass. Everything is backwards.” It’s not that corporate criminal law succeeds where the law for street crime fails. Very far from it! Rather, corporate criminal law’s disabling pathologies are the exact opposite of what first-year law students might expect: While people who commit crime on the street often do so because of lack of opportunity, defendants in corporate criminal law rarely have sympathetic back stories. While over-incarceration and brutal enforcement tactics are common themes for street crime, rampant underenforcement is the norm in corporate criminal law. While serious street crime predictably leads to harsher sanctions, the most egregious corporate criminals are least likely to face meaningful sanction. While street criminals who cannot pay a big enough fine go to prison, prosecutors are more likely to try to lower any fine that a corporation cannot pay.
These striking contrasts between the law of the street and the law of the C-suite are not just vague impressions. The numbers speak for themselves. While 8.6% of the adult population in the United States has a felony conviction, less than .03% of corporations do. Even when courts and prosecutors do deliver corporate sanctions, they are paltry. The average corporate criminal fine is less than 0.04% of its market capitalization and less than 1% of its annual corporate revenue. Half of corporations caught in the act pay no fine at all; more than half get away without even having to agree to any sort of supervised reform. To put this in the context of the average working American, the typical corporate criminal penalty amounts to about $400 and a promise to do better.
A recent symposium co-hosted by the Journal for Corporation Law and Georgetown Law School asked participants to “Imagine a World Without Corporate Criminal Law.” Each of twelve papers presented different perspectives—sometimes dramatically different perspectives—on what values corporate criminal law advances or hinders. However, everyone agreed on two points: 1) Corporate criminal law is different, and 2) it is broken. My co-author W. Robert Thomas and I concluded that corporate criminal law is so dysfunctional it doesn’t really resemble criminal law at all. Criminal law is supposed to have four distinctive features. It 1) utilizes uniquely demanding procedure 2) to target the worst offenders with 3) the harshest penalties and 4) society’s deepest moral condemnation. The United States’ purported system of corporate criminal justice lacks all four. The biggest corporate criminals routinely side-step all criminal procedure and any possibility of conviction by cutting deals with prosecutors, trading paltry fines and empty promises of reform for government press releases praising their cooperation. The real question is not whether the United States should retain corporate criminal law, but what it would take for the United States to have a corporate criminal justice system in the first place.
Law schools are contributing to the problem. This academic year, only half of the top thirty law schools are offering a course whose description includes substantive coverage of corporate crime. Without this background, students will graduate with only a partial understanding of criminal justice, and, by some measures, only of the smaller part of it. While individual suspects represent the overwhelming majority of cases processed, they account for only a fraction of crime’s total burden. Conservative estimates from the FBI put the economic impact of corporate crime at twenty times higher than all other crime combined.
Introductory courses on criminal law and criminal procedure, which focus on individual defendants, leave students with some dangerous misconceptions about criminal justice in the United States. Individual criminal suspects do confront outrageous abuses. Anger is fitting, perhaps even to the point of justifying some form of criminal law abolition. But these concerns play out very differently in the corporate context. Without an adequate understanding of the differences between individual and corporate crime, future criminal justice reformers might push us out of the individual frying pan and into the corporate fire.
Law schools, take note. You’re training the next generation of advocates and lawmakers but often relying exclusively on individual criminal law to do so. Corporate crime has an outsized impact (not to mention a growing number of professional opportunities for future lawyers). I know adding corporate crime to a curriculum can be difficult, but I’ll share lesson plans, syllabi, slides, lecture notes, etc., with anyone interested to teach the course. We ignore it at our peril.
Mihailis Diamantis is a professor at the University of Iowa College of Law who specializes in corporate crime.