Regulation by Prosecutor

There is a quaint perspective from which the prosecutor’s role is limited to investigating crime and advocating for punishment. Of course, prosecutors serve both these functions, but the description is far too narrow to capture the work of the modern prosecutor. Nowhere is this more apparent than in the world of corporate criminal law. As much as they investigate and advocate, prosecutors also regulate.

They have secured their regulatory power through plea bargaining. Like people, although to an even greater degree, firms facing criminal charges settle. Settlement agreements are crafted, monitored, and adjudicated by prosecutors, and in this way prosecutors come to serve in an effectively regulatory capacity. No longer limited to investigating prior bad conduct and seeking punishment, the prosecutor establishes terms for governance of the corporation, monitors compliance with those terms, and serves as a de facto adjudicator of non-compliance.

That federal prosecutors function in this way is curious. There are reasons to question whether the criteria by which federal prosecutors are hired align with the expertise one would seek in governing corporate America. There are also grounds for concern about whether the threat of criminal punishment is an appropriate factor in making the rules. And, of course, regulation of each firm individually is inefficient and likely arbitrary.

In a new article, I suggest that the prosecutor’s regulatory function in corporate cases is but a subset of a broader and more well-established trend. Prosecutors have long exercised regulatory power over defendants in a wide array of non-corporate cases.

This power is amplified and more obvious in the corporate context, if only because its impact is more widespread, but the practice is not fundamentally new. For example, prosecutors regulate whether a former-defendant may run for office, return to particular employment, or be deemed to have offered sufficient public apologies. In each case, these powers are limited to a single person and not a large, public corporation, but the powers are similar to those exercised in the corporate context. They are prospective, remedial, and checked only in a limited manner. Prosecutors are regulators in all sorts of cases.

The prosecutorial function in the corporate context is distinctive in its scale and specialization. Deciding whether a particular law enforcement official may seek a new job as a police officer involves judgments about one person. Deciding appropriate lines of report for compliance issues in a multinational firm involves judgments about group dynamics and culture on a massive scale. Similarly, a prosecutor’s decision about what sort of public apology will serve her goals of deterring crime and expressing society’s moral condemnation is probably more art than science. But, comparable decisions about the right number and placement of coal dust explosibility meters in a mine—terms included in the non-prosecution agreement Alpha Natural Resources signed upon acquiring Massey Energy—are plainly a matter of particular expertise.

Regulation by prosecutor is itself not good or bad. The benefits are fairly clear. Federal prosecutors are extraordinarily independent and resistant to capture. Moreover, one-off post hoc regulations enabled through the prosecutorial process can be better customized to the particularities of an industry, a company, or an individual.

The costs, however, are also clear. Prosecutors are generalists, frequently regulating in areas about which they possess little expertise. Regulation under threat of indictment can be coercive and overly burdensome. Finally, in the corporate context, law enforcement resources are dwarfed by the size of industry, causing prosecutorial regulation to be scattered almost arbitrarily among people, firms, and industries.

In any event, there is little reason to think we can return to a time when prosecutors only investigated and advocated. The breadth of substantive criminal law empowers prosecutors to intervene in a wide expanse of public and private life, whether individual or corporate. Courts’ nearly unlimited probationary power allows prosecutors to impose almost unlimited rules on defendants. And, most important, plea bargaining has allowed prosecutors to usurp the judicial function in probation as well as sentencing: the prosecutor largely determines the terms of probation and what constitutes a violation. Add to these conditions the perceived failure of regulators in certain contexts, and public demand for expressive justice, and it is clear that prosecutors will continue to exercise an outsized role in governance, corporate and otherwise.

Therefore, the regulatory function of prosecutors is here to stay and ought to be addressed directly. Courts have long held that prosecutorial discretion is all but unfettered. Courts will not review exercises of prosecutorial authority absent a clear showing that the prosecutor has violated the Constitution.

This deference, however, is grounded in considerations of the prosecutor’s power to pursue or decline charges. Courts have rightly worried about becoming “super-prosecutors,” and have pointed to the disparate competence of prosecutors and courts in assessing the strength of a case, its deterrence value, and its place within enforcement priorities, and how those priorities are set in the first place. These concerns are less pronounced in the context of prosecutors setting and assessing compliance with prospective rules for defendants. While the executive branch is better situated to determine which cases to bring, when, and how, the courts are better situated to determine the terms of probation and to assess compliance with those terms.

Admittedly, distinguishing prosecutors’ regulatory function from their investigative and charging functions does not resolve the problem. The former is the direct consequence of the latter: The discretion to bring charges empowers prosecutors to govern probation through the terms of settlement. Prosecutors maintain near unfettered discretion even in their regulatory role because of their near unfettered discretion in charging decisions. Recognizing the distinction, however, should lead to further inquiry about how best to govern the ever-expanding work of prosecutors.

This post comes to us from Professor Gregory M. Gilchrist at the University of Toledo College of Law. It is based on his recent article, “Regulation by Prosecutor,” available here.

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