With Meghna Chakrabarti
Former corporate lawyer Jamie Gamble says current law pushes executives to behave like "sociopaths." He says there’s a free market solution.
Jamie Gamble, former partner at the law firm Simpson Thacher & Bartlett. He spent 15 years working as a corporate lawyer. Volunteer director of the Justice Index, a program of the National Center for Access to Justice.
From The Reading List
Medium: "Jamie Gamble: The Most Important Problem in the World" — "Is . . . ?
"Climate change; millions of people displaced by war, crime and poverty; epidemic income insecurity draining the good-will and hope required for democracy to work; authoritarian fever rising in response; multitudes rejecting compassion in fear that the world they cherish is lost if 'us' isn’t protected from 'them'; dirty water, toxic soil and urban air that sometimes can’t be seen through let alone breathed.
"Answer: none of the above.
"The most important problem in the world is a reasonable sounding provision of the corporate law that governs most major U.S. companies."
New York Times: "Ex-Corporate Lawyer’s Idea: Rein In ‘Sociopaths’ in the Boardroom" — "Jamie Gamble spent most of his career as a partner at the law firm Simpson Thacher & Bartlett, which counts virtually every major company in the United States — including Facebook, General Motors, Google and JPMorgan Chase — among its clients.
"A longtime lawyer for the insurance giant American International Group, Mr. Gamble worked alongside Richard Beattie, Simpson Thacher’s chairman at the time, to advise A.I.G. during the financial crisis of 2008 and in the years of litigation that followed.
"Mr. Gamble has had an epiphany since retiring nearly a decade ago that is so damning of his former life that it is likely to give his ex-partners a case of agita.
"He has concluded that corporate executives — the people who hired him and that his firm sought to protect — 'are legally obligated to act like sociopaths.'
"He made that determination about five years ago when he started to work on a novel that recently inspired him to compose a provocative essay elucidating what he calls, based on his firsthand experience, a 'complex network of horribles' in corporate America. He recently shared a draft with a small number of colleagues, seeking their comments.
"'The corporate entity is obligated to care only about itself and to define what is good as what makes it more money,' he writes in the essay. 'Pretty close to a textbook case of antisocial personality disorder. And corporate persons are the most powerful people in our world.'
"Mr. Gamble’s change of heart will not exactly come as a revelation to the increasingly vocal group of investors, politicians and even chief executives who are pushing companies to be more responsible and to focus on metrics like environmental sustainability and corporate governance rather than on simply maximizing profits.
"But in the world of corporate lawyers — and the board governance experts among whom it is quietly getting attention — Mr. Gamble’s essay may be a watershed.
"He doesn’t blame his former clients, exactly. He blames the law."
Fortune: "Putting Ethics on Par With Shareholder Value: CEO Daily" --"Jamie Gamble, a retired high-powered corporate lawyer who once represented insurance giant AIG. in the wake of the 2008 financial crisis, accuses boards of being forced to act 'like sociopaths.' And he has hit upon a seemingly simple, but radical, fix.
"According to a story in the New York Times, Gamble has written a provocative essay proposing businesses be required to enact ethical guidelines into their corporate bylaws. This opens an avenue for the plaintiffs’ bar to sue these companies if they fail to live up to these principles. In essence, Gamble’s idea is to use the mechanism that has helped elevate shareholder value above all others—the shareholder lawsuit—and, in a bit of legal jujitsu, turn it into a tool for placing ethical considerations on at least an equal footing with profit.
"Gamble writes that his idea will mean corporate boards will have to discuss wider ethical considerations. 'They will have to make a conscience,' he writes, according to the Times.
"Columnist Andrew Ross Sorkin notes Gamble’s idea is similar to what Democratic presidential candidate and Sen. Elizabeth Warren has proposed. She wants to require companies with more than $1 billion in revenue to receive a federal charter that would obligate their directors to consider the interests of all stakeholders, not just shareholders."
Stefano Kotsonis produced this hour for broadcast.
This program aired on July 31, 2019.