Are Pitchforks Next?
This is a story from last week that should have gotten more attention. Richard Fuld, CEO of Lehman, was knocked out by one of his bankers as he worked out in the firm’s in-house gym in London.
“He was on a treadmill with a heart monitor on. Someone was in the corner, pumping iron and he walked over and he knocked him out cold.”
Very satisfying! Especially since Fuld had been puffing up Lehman’s chances over the preceding several weeks. (Whether that sales talk should be actionable in light of the psychology of Lehman’s fall – i.e., whether you should be able to puff yourself out of a bank run – is an interesting legal question.)
It would be useful for policymakers to think about ways to channel this kind of anger productively. For violations of the duty of loyalty, we’re already talking about leaving corporate executives naked, homeless, and without wheels. But what can we do about “mere” incompetence that imposes severe social costs? As I’ve been telling my corporate law class these last few weeks, current doctrine provides very weak to nonexistent remedies for negligence, no matter how widely its effects are felt. This doctrine is based on an empirical intuition about the relationship between law, risk-taking and entrepreneurship. That is, the law assumes that business risk-taking requires a special kind of legal immunity, and is particular liable to be badly judged in hindsight. I suspect that both of these assumptions are wrong, and hope that the present crisis presents a useful forum to think about our current corporate-negligence regime more critically.
Otherwise, I fear the fire next time.