Structural Reform Prosecution

In what I call a structural reform prosecution, prosecutors secure the cooperation of an organization in adopting internal reforms. No scholars have considered the problem of prosecutors seeking structural reform remedies, perhaps because until recently organizational prosecutions were themselves infrequent. In the past few years, however, federal prosecutors have adopted a bold new prosecutorial strategy under which dozens of leading corporations have entered into demanding settlements, including AIG, American Online, Bristol-Myers Squibb Co., Computer Associates, HealthSouth, KPMG, MCI, Merrill Lynch & Co., and Monsanto. To situate the DOJ’s latest strategy, I frame alternatives to the pursuit of structural reform remedies as well as five alternative ways prosecutors can pursue structural reform. To better understand what the DOJ accomplished by choosing to pursue structural reform and then doing so at the charging stage, I conducted an empirical study of the terms in all agreements the DOJ has negotiated to date. My study reveals imposition of deep governance reforms, consistent with the purposes of the Sentencing Guidelines, but also perceived prosecutorial abuses and some indications of overreaching. I conclude that given the breadth of prosecutorial discretion and the deferential, limited nature of judicial review, the guidance that the DOJ provides will chiefly define the future development of its emerging structural regime for deterring organizational crime.

The Principal Problem: Towards a More Limited Role for Fiduciary Law in the Nonprofit Sector

Nonprofit law scholars have increasingly recognized that state fiduciary law developed to govern for-profit corporations does not readily translate into the nonprofit sector. A substantial body of literature has sought to strengthen nonprofit governance by modifying for-profit fiduciary law to better fit the needs of the nonprofit sector. No one has answered, however, the fundamental question of to whom nonprofit boards and directors owe their fiduciary duties. Without understanding whose interests fiduciary law should protect, attempts to strengthen it are premature.

Directors and officers of for-profit corporations owe their duties to shareholders. Nonprofit corporations lack shareholders but could theoretically be accountable to donors, beneficiaries, customers, the state, or their charitable purpose. This Note argues that nonprofit corporations in fact have no appropriate principals, and thus fiduciary law is a poor governance mechanism for the nonprofit sector. The legal toolkit available to reform nonprofit governance is thus more limited than has been previously acknowledged. In the future, legal efforts to reform nonprofit governance should focus on creating targeted rules to address specific abuses and on creating conditions that allow market-based governance mechanisms to flourish.

The Dark Side of Town: The Social Capital Revolution in Residential Property Law

Social capital has pervaded property law, with scholars and policy-makers advocating laws and property arrangements to promote social capital and relying on social capital to devolve property governance from legal institutions to resident groups. This Article challenges the prevailing view of social capital’s salutary effects with a more skeptical account that examines the dark side of residential social capital—its capacity to effectuate local factions and to promote restraints and inegalitarianism that close off property. I introduce a set of claims about social capital’s dark side in residential property and explore these points through the examples of local racial purging, land cartels, and residential self-governance. First, contrary to the assumption of a social capital deficit, residential racial segregation and land cartelization, perhaps the deepest imprints on the American property landscape today, suggest an abundance of local social capital and possible unintended consequences of interventions to build social capital. Second, “governing by social capital,” or relying on social capital for property self-governance, may empower factions, breed conflict, and increase the demand for residential homogeneity as a proxy for cooperation. In light of the mixed evidence for social capital’s benefits and its sizeable dark side, the more pressing and productive role for property law is not to promote social capital, but to address its negative spillovers and illiberal effects.