At the 2021 Annual Meeting, members of The American Law Institute voted to approve Tentative Draft No. 2 of Principles of the Law, Compliance and Enforcement for Organizations. The vote marks the completion of this project.

This is the first time that The American Law Institute has produced Principles on this area of the law. Work began in 2015 under the leadership of Reporter Geoffrey P. Miller of New York University School of Law and Associate Reporters Jennifer H. Arlen of New York University School of Law, James A. Fanto of Brooklyn Law School, and Claire A. Hill of University of Minnesota Law School.

“The basis of this project comes out of the 1990s, 2000s and 2010s, where we had an enormous growth in fines and criminal prosecutions of organizations for various misconduct and misdeeds,” said Reporter Geoffrey Miller. “This caused a very powerful set of discussions and set many legal minds thinking about, what is a way to both enforce the law against organizations’ misconduct, but also to encourage organizations to enforce the law on themselves, through the processes of compliance.”

This subject matter is one that combines legal and ethical standards. It deals with both externally imposed norms, such as laws and regulations, and internally imposed norms, such as corporate codes of ethics. And it is developed through discretionary actions of regulators and prosecutors and through settlements of enforcement proceedings that do not carry the force of generally binding law. Accordingly, the best course is to set out best-practice standards that may or may not draw on underlying legal norms. The Principles seeks to provide best practices for a variety of public and private entities, but its main audience is large, publicly traded corporations.

“We saw that there was basically a challenge with the role of lawyers because lawyers are very involved in this process, but not always in a strictly legal role,” said Reporter Miller. “They play a role that’s more holistic and involves non-legal and legal aspects, but it challenges the basic idea of what it means to be a lawyer. There’s also three new professions that have grown up: internal compliance, risk management, and internal audit, which had been around, but it’s been professionalized.”

“It is very exciting to see the completion of this important project,” said ALI Director Richard L. Revesz. “For this extremely significant accomplishment, I am very grateful to Professors Miller, Arlen, Fanto, and Hill, and to the very dedicated Advisers and Members Consultative Group. I believe these Principles will provide important guidance to organizations in this complex area of law.”

With the approval of the draft, the project Reporters will now prepare the Institute’s official text for publication. Until the official text is published, this and previous Tentative Drafts approved by ALI’s membership are the official position of ALI, and may be cited as such.

* * *

About The American Law Institute

The American Law Institute is the leading independent organization in the United States producing scholarly work to clarify, modernize, and improve the law. The ALI drafts, discusses, revises, and publishes Restatements of the Law, Model Codes, and Principles of Law that are enormously influential in the courts and legislatures, as well as in legal scholarship and education.

By participating in the Institute’s work, its distinguished members have the opportunity to influence the development of the law in both existing and emerging areas, to work with other eminent lawyers, judges, and academics, to give back to a profession to which they are deeply dedicated, and to contribute to the public good.

For more information about The American Law Institute, visit www.ali.org.

SHARE

Tags:


Geoffrey P. Miller

Reporter, Compliance, Enforcement, and Risk Management

Geoffrey Miller, Stuyvesant P. Comfort Professor of Law at NYU Law School, is author or editor of eight books and more than 200 articles in the fields of compliance and risk management, financial institutions, corporate and securities law, constitutional law, civil procedure, legal history, jurisprudence, and ancient law. He has taught a wide range of subjects including property, corporations, compliance and risk management, financial institutions, land development, securities, the legal profession, and legal theory.

Jennifer H. Arlen

Associate Reporter, Compliance, Risk Management, and Enforcement

Jennifer Arlen, the Norma Z. Paige Professor of Law at NYU Law School, is one of the nation’s leading scholars on corporate liability, specializing in corporate crime, vicarious liability, and securities fraud. She also has written extensively on medical malpractice liability and experimental law and economics. Arlen received her BA in economics from Harvard College and her JD and PhD in economics from New York University. She is co-founder and director of the NYU Program on Corporate Compliance and Enforcement. She also is a co-founder, director, and past president of the Society of Empirical Legal Studies, is a former director of the American Law and Economics Association, serves on the editorial board of the American Law and Economics Review, and chaired the Law and Economics, Remedies, and Torts sections of the Association of American Law Schools.

James A. Fanto

Associate Reporter, Compliance, Enforcement, and Risk Management

James Fanto, Gerald Baylin Professor of Law at Brooklyn Law School, teaches courses on banking, broker-dealer law, regulation and compliance, corporate and securities law, corporate finance, and comparative and international corporate law and governance. His extensive writings and lectures both in the United States and abroad focus on the law relating to banks, broker-dealers, corporate boards, comparative corporate governance, cross-cultural securities disclosure and merger decision making. He is the co-director of the Center for the Study of Business Law and Regulation, and is affiliated with the Dennis J. Block Center for the Study of International Business Law, and the Center for Law, Language & Cognition.

Claire A. Hill

Associate Reporter, Compliance, Risk Management, and Enforcement

Claire Hill is the James L. Krusemark Chair in Law at University of Minnesota Law School. She teaches corporate law, mergers and acquisitions, contracts, and a seminar in law and economics. She is the founding director of the Law School’s Institute for Law and Rationality, and the associate director of its Institute for Law and Economics. She is also an affiliated faculty member of the University’s Center for Cognitive Sciences. Before becoming a law professor, she practiced corporate law at several law firms. Her research interests include corporate governance, capital structure, structured finance, rating agencies, secured debt, contract theory, law and language, and behavioral economics.

Pauline Toboulidis

The American Law Institute

0 Comments

Submit a Comment

Your email address will not be published.