Buying Silence

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Long title: 
Buying Silence: Confidentiality, Professional Role & Financial Incentives for Whistleblowers
Author(s): 
Clark, Kathleen
Author(s)' contact information: 
Kathleen Clark John S. Lehmann Research Professor of Law 923 15th St. NW Washington University in St. Louis Washington, DC 20005 http://law.wustl.edu/Faculty/pages.aspx?id=222 314-827-4081 http://ssrn.com/author=110534 kathleen_clark@me.com linkedin.com/profile/edit?trk=hb_tab_pro_top
Conference title: 
ILEC V
Conference location: 
Banff, Alberta
Country: 
Canada
Year: 
2012

The law on the books can be a far cry from the law that is actually enforced. If particular conduct is prohibited but law enforcement never learns of the violation, that prohibition is ineffective, and the disjuncture between the law on the book and what is enforced can breed disrespect for the law. A key challenge for law enforcement – both civil and criminal -- is the uncovering of information about potential or actual violations of the law.
Whistleblowers have played a key role in enforcing legal norms, both internally in organizations and externally when they disclose violations. The law has long recognized the importance of whistleblowing, and encourages this activity in a variety of ways. This paper focuses on an increasingly important method of encouraging whistleblowing: providing financial incentives to whistleblowers. Part I puts this method into the larger context of how the law uses whistleblowing to protect the public interest. Part II describes the most important whistleblower bounty programs, and examines one particular statute – the False Claims Act -- through which whistleblowers have been awarded billions of dollars. It also discusses two-year-old statute– Dodd-Frank -- that will provide whistleblower bounties for major securities fraud. Part III describes how these financial incentive programs for whistleblowers stand in tension with confidentiality obligations that arise in contracts, professional rules and other contexts, and Part III examines the tension between, on the one hand, the public interest in disclosure of wrongdoing which is furthered by whistleblower bounty programs, and on the other hand, the public interest in preservation of confidentiality and certain professional roles. The paper explores how courts have resolved this tension where lawyers and other professionals have sought whistleblower bounties. Part IV explores whether financial incentives are different in kind from other ways that the law promotes whistleblowing (such as employment protection), and concludes that financial incentives should be available to lawyers who may legally report crimes and frauds of their former clients.

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