The Model to Govern and Regulate the Gatekeepers - Essay Example

Law & Ethics Question The most efficient model to govern and regulate gatekeepers as an integral element of corporate governance The ABA Model Rules of Professional Conduct (2004) has emerged as the most efficient model to govern and regulate the gatekeepers, considering that this model defines a lawyer in three different terms, and inform of three different entities, thus placing the burden of gate keeping on the lawyer of a corporation. First, the model defines a lawyer as a representative of the client, secondly as an officer of the public legal system, and thirdly, as a public citizen who have the responsibility of enhancing the quality of justice (Wan, 487). Through defining a lawyer as a three-entity being, the ABA Model of Professional Conduct places the lawyer at a position of responsibility to prevent misconduct within an organization, at acceptable costs. According to this model, whenever a lawyer is representing a client, it does not amount to the lawyer endorsing the economic, sociopolitical or moral outlook of the client (Zacharias, n.p.). This therefore means, that a lawyer is distinct from the activities of a client even in appointed representation, and thus should not be party to the activities of the client that amount either to fraud or misconduct of the client. This way, the model requires the lawyer to act in a way that does not entangle him/her in misconduct or fraud committed by the client, and thus act as a gatekeeper who prevents such occurrences within an organization (Wan, 502). Further, the ABA Model 2004 defines and limits the scope of representation of a client by the lawyer, through stipulating that a lawyer may not represent a client or assist the client in a conduct that is deemed to be illegal or fraudulent, but that the lawyer should instead discuss and offer legal counsel to the client, regarding such matters (Zacharias, n.p.). This provision serves to limit the extent to which the client can engage a lawyer in illegal, criminal and fraudulent activities, thus placing the lawyer in gate keeping position; that helps to avert crime, illegality and fraud within an organization (Wan, 495). The ABA Model of Professional Conduct is efficient in governing and regulating the gatekeepers as an integral part of corporate governance, through defining the corporate organization as a client, and through providing for the course of action that a lawyer should take in protecting the client against adversarial intentions and activities (Zacharias, n.p.). The Model provides that whenever an organization’s lawyer knows that an employee, an officer or any other person associated with the organization is engaged in an action or is intending to engage in an action that is likely to harm an organization, the lawyer is duty-bound to act in the best interest of the organization, to prevent the occurrence f the same (Wan, 512). According to the provisions of this model, unless the lawyer reasonably believes that it will not be in the best interest of the organization, the lawyer should refer the matter to a higher authority within the organization, and if it is warranted, to another higher authority outside the organization, that will act in the best interest of the organization (Zacharias, n.p.). This way, the model places a lawyer in a gate keeping position, and requires that he lawyer should always act in the best interest that protects the client, or hinder the client from conduction fraudulent, criminal or immoral activities (Wan, 488). Question 2: The incentives framework that rentier-state theory introduced in Kuwait and how it impacted the business environment The rentier-state theory introduced a political autonomy framework of incentives in Kuwait, allowing the country to be able to discharge its internal affairs without being overly influenced by external and foreign forces, regarding the internal matters of governance and administration (Al-Zumai, 7). This incentive framework is an essential aspect for the establishment of a legal framework that works for the country, devoid of how the foreign forces and other nations would want to relate with the country. Whenever a country is not in a position to offer the worlds something that is highly valuable, and thus it becomes dependent on other nations for donations and support, there is tendency of such country being politically and economically influenced and manipulated (Al-Zumai, 2). However, whenever a country is able to support its systems through renting its natural resources that are highly demanded by other countries, the tendency of political influence to such country is always low or even lacking. Therefore, the rentier-state theory postulates that Kuwait, as country that is renting its natural resources to the rest of the world, serves to develop a framework of incentives that allows the business world to operate with the country on its favorable terms, thus benefiting the business community in Kuwait (Al-Zumai, 14). Another major incentive framework that the rentier-state theory has introduced in Kuwait is the introduction of the substantive role of country’s parliament in legislating and monitoring the government (Al-Zumai, 5). The National Assembly in Kuwait plays a major role in enhancing the balance of power, through ensuring that the government does not out step its mandate regarding the exploitation of natural resources. This is an important incentive framework for the business community in Kuwait, considering that it enables the interest of the business community to be upheld through legislations and monitoring of the government’s role in the renting of natural resources, which would otherwise be the sole authority of the government to determine (Al-Zumai, 11). This way, the interest of the business community in the exploitation and renting of the natural resources are taken catered for, making the business in the country substantially locally driven. However, the negative incentive framework introduced by the rentier-state theory in Kuwait is that; considering that the country no longer depends on foreign countries to thrive, and considering that the country is able to set its terms regarding the exploitation and renting of its natural resources, the internal legal and institutional frameworks are rendered weak (Al-Zumai, 18). This is because, the country no longer requires the intervention of foreign countries in internal affairs, and thus it is not open to international law and its scrutiny (Al-Zumai, 7). This serves to weaken the legal framework as well as the institutional freedom framework, and thus affecting the business community negatively, considering that much of the business activities, especially regarding the renting of natural resources are not open to fair competition, but more to government restriction. The consequence is an undermined business environment that does not auger well with private investing (Al-Zumai, 31). Question 3: Can the model of professional boards be applied in Kuwait? The model of professional boards can be applied in Kuwait, to help streamline the functionality of organizations. This is because, major organizations in Kuwait faces the same fate like those of other organizations in the world; which is insufficient oversight that eventually causes either the failure of the organizations in some areas, or major scandals and loses that brings such organizations down (Pozen, 51). The pros of applying model of professional boards in Kuwait The application of the Board of Directors model has often proved ineffective, considering that most of such directors do not have adequate and relevant expertise in the matters of the organizational business (Pozen, 52). Therefore, the model of professional boards will serve to address this shortcoming, through introducing a professional board that comprises of individuals with adequate expertise in matters of the organizational business. This expertise will in turn enhance the much desired oversight over major technical areas of the organization, which can only be monitored by individuals with the relevant expertise (Pozen, 51). Additionally, professional boards model will serve to rectify the number problem associated with board of director model, which is always made up of many members, an aspect that renders decision making by such members inefficient, due to disagreements and delays in reaching into a constructive conclusion Further, the professional board’s model will also be applicable in addressing the time-limit deficiency created by the Board of Director model, which has always left the members of the board with limited hours to address the affairs of the business organization, while spending more of their time in private affairs (Pozen, 52). The problem with this tendency is that the board is always caught unawares whenever an occurrence that threatens to bring down the organization emerges (Pozen, 53). Insufficient board’s oversight and control is the major issue that has rendered many organizations fail in their operations, and often collapse or generate scandals or losses for their stakeholders. The other notable advantage that will arise from the application of the professional board’s model in Kuwait is that; the involvement of the management in the oversight body of the organization will be limited to include only the CEO as a member of the management, while the rest of the members will be independent directors (Pozen, 52). This will serve to ensure that the management does not interfere with the oversight role that the professional board will play towards the organization, as opposed to the Board of Director Model, which involves a number of high ranking management team members in the board, who in turn influences the oversight role of the board, to suit their management style interests (Pozen, 54). The cons of applying model of professional boards in Kuwait The model of professional boards will however be problematic in a number of ways. First, the sufficient professional members of the boards with relevant and diverse expertise will be hard to find, to fill all the positions of the board of directors currently existing (Pozen, 54). Secondly, the requirement that such professionals spend more time in running the organization’s affair will limit the availability of the professional experts, even when they could be sufficient to fill the positions (Pozen, 55). Finally, the requirement of professional experts will cause a conflict with the existing legal systems, which provides for a late retirement age, yet the model of professional boards will require professionals who are still energetic and actively involved in the affairs of the organization, as opposed to the current Board of directors model, which is virtually formed of retirees (Pozen, 56). Works Cited Al-Zumai, Fahad. Kuwait’s political impasse and rent-seeking behavior: A call for institutional reform. London School of Economic and Political Science, June 2013. 1-33. Print. Pozen, Robert C. “The Big Idea: The Case for Professional Boards.” Harvard Business Review December, 2010. 50-58. Print. Wan, Steven. “Gatekeeper Liability versus Regulation of Wrongdoers.” Law Review34. 2: (2008). pp. 483-522. Zacharias, Fred C. "Lawyers as Gatekeepers". University of San Diego Public Law and Legal Theory Research Paper Series, September 2004. Retrieved November 15, 2013 fromhttp://law.bepress.com/sandiegolwps-pllt/art20 Read More