When the Law's Not Enough to Fix the Problem

  • The pharmaceutical firm that keeps selling a profitable medication though its researchers know it has significantly adverse side effects
  • The hospital that tolerates physicians’ abusive behavior though aware of the distraction their conduct causes during day-to-day practice
  • The automobile manufacturer that conceals a discovered defect that could cause fatalities rather than absorb the costs of expensive product recalls

Organizational disasters have resulted recently from each of these fact patterns. I know I’m not alone in noticing how the same kinds of action keep causing avoidable catastrophes. Trained legal professionals hired to clean up problems like these will quickly issue spot violations tied to FDA, labor and employment, and product liability regulations. Applying their talents and training, they’ll help reduce exposure through successful analysis, argumentation, and negotiation. But while such legal skill is well-suited to lessen catastrophic losses once bad events have occurred, relying too heavily on it for future prevention, as we often do, won’t prevent future catastrophes.
This isn’t a knock on my fellow professionals. By analogy, a superbly gifted surgeon will have all the skills needed to delicately remove a damaged kidney but will likely lack the full arsenal of knowledge and training to treat the underlying disease requiring the operation. It’s simply a different specialty. Similarly, with complex business problems of the kind described above, the strategies, actions, and tools required to prevent systemic problems are not wholly aligned with the legal expertise that’s required to resolve them.
Here’s why. Serious business problems of the kind summarized above generally aren’t caused because people didn’t know the legal basics about what they should or shouldn’t do or because their organizations lack policies or systems to prohibit or intercept improper acts. Instead, they result from failures of leadership, culture, and values which block actions that would logically prevent, detect, or correct such events. Yet, leadership, culture, and values are not subjects that lawyers study, are trained to evaluate, or often take seriously.
When I practiced law as management counsel, I did not spend much time wondering what caused the legal problems I was trying to prevent. I did not understand what leadership, culture, and values meant or the impact they had on organizational conduct. To me, they were buzz words and jargon, not the keys to solving what later became the “concrete” legal problems I had been hired to defend.
As legal counsel, I studied the law to figure out the clearest areas of risk; I read regulations to understand what needed to be done and documented. But I couldn’t find a statute saying how leaders must act to demonstrate commitment to values like honesty, safety, quality, civility, or inclusion. Nor did I think to look for one. In fact, there was not then and is not now a code stating what it takes to make daily conduct part of culture or what culture is and how it is developed. So, without knowledge or training in addressing systemic legal problems based on cultural issues, as many serious issues are, the legal approach often recommended then and now is this: Communicate the law and policies, set up hotlines, keep good records. These steps will fix your problem.
But here’s what I’ve learned over the past 20+ years: They won’t. Compliance with the law is vital – but to avoid serious systemic failures of the kind summarized above, it’s just never enough. Here are a few questions to consider when determining if a problem must address cultural change and requires broad-based leadership commitment or is one where communicating information and setting up processes may be sufficient.

  • Are issues that need to be fixed tied to basic kinds of behavior such as abuse, harassment, falsification of information, or cover-up of problems? If so, giving people more information won’t solve the problem; offenders likely already have the information, they are just not seeing it as important.
  • Are standards being ignored by key business leaders? If so, then resulting ills are likely the result of ineffective leadership, not just a need for more information being transmitted or more rigorous policies.
  • Are proper standards discussed by top leaders but no one else? If so, messages and action steps are not being properly communicated and integrated into daily performance.
  • Are company values ever discussed in day-to-day business meetings in the context of how business decisions are made? If not, then they are likely cosmetic and won’t help prevent or resolve major problems.
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