Portal de Periódicos da CAPES

For-Profit Public Enforcement

2014; Harvard Law Review Association; Volume: 127; Issue: 3 Linguagem: Inglês

2161-976X

Margaret H. Lemos, Max Minzner,

Regulation and Compliance Studies

B. Individual Incentives Agencies are not monoliths. In the end, agency actions are the actions of individuals. We have argued that agencies, as institutions, have self-interested incentives to emphasize monetary penalties in enforcement actions. To what extent do those incentives translate to the enforcement decisions made by individual employees? Recall the theory of the budget-maximizing bureaucrat described in section II.A: high-level agency officials seek to maximize an agency's discretionary budget so as to reap the resulting benefits of increased salary, reputation, power, ease of management, and so on. Lower-level employees have similar interests--so the argument goes--because the benefits of a larger budget trickle down the organizational hierarchy in the form of enhanced career opportunities and other perquisites. (146) If correct, this theory would provide an easy answer to the question of individual employee incentives, at least for agencies that are permitted to retain all or some of the proceeds of enforcement. There is scattered evidence of enforcement employees, particularly at the state and local level, reaping quite direct and personal benefits from asset forfeiture. (147) To take just one example, a prosecutor in Somerset County, New Jersey, reportedly used $6000 out of forfeiture funds to pay for a corporate membership in a private tennis and health club for the benefit of his seventeen assistant prosecutors and fifty detectives. (148) But outside some relatively extreme instances of funds being diverted from enforcement to personal use, there is reason to doubt the trickle-down benefits of budget growth. (149) While efforts to verify Niskanen's budget-maximization theory have provided ample evidence that bureaucrats systematically request larger bud-gets, there is less evidence that tangible awards like salary increases and promotions follow from expanding budgets. Moreover, even if it were clear that the agency's interest in a bigger budget were shared throughout the ranks of employees, we would still need to consider whether--and how--the institution's reputational interests are internalized by individual employees. A more promising way of approaching the inquiry into the incentives of public enforcement attorneys is as one instance of the general principal-agent problem for organizational employees. (151) Agency employees, like other workers in the public and private sectors, usually want to succeed at their jobs. Success typically results from furthering the objectives of the larger organization. If the agency sees financial recoveries as a core goal, we should assume that enforcement lawyers are going to pursue that goal for the same reasons that lawyers want to conduct good depositions, write persuasive briefs, and show up on time for court. Employees care about these goals because of hard incentives, such as bonuses and termination, or soft pressures, like self-motivation and peer pressure. Here too, however, matters are more complicated than they first appear. The constraints on public employees differ from those on employees in the private sector. Government employees face weaker incentives compared to employees of other organizations because both the downside threat of termination and the upside promise of additional compensation are reduced. As a result, the principal-agent problem for public employees may be increased--though, as we explore below, the effect on the direction of penalties is unclear. The difference in the incentives for public employees as compared to the private sector employees is widely recognized. Both the carrots and sticks are more limited. Government lawyers are relatively unlikely to be fired compared to their counterparts at private law firms. Public sector enforcement lawyers are frequently union members with the protections that come from negotiated collective bargaining agreements. (152) By contrast, union membership among lawyers at private firms is rare to nonexistent. …