One thing that’s badly missing in our thinking about money-in-politics and lobbying

Let’s call it CJA

Imagine the money-in-politics and responsible lobbying research and policy world has a tremendous blind spot.

Imagine it fails to properly examine, not to mention regulate one entire third of government.

It overlooks a set of highly innovative and special influencing strategies that promise returns on investment to special corporate interests that often dwarf the benefits from conventional lobbying and that shape not just the proverbial rules of the game, but even further upstream the rules for the rules of the game.

Imagine scholars and practitioners fail to pay sufficient attention to an entire segment of the lobbying service industry whose financial muscle is an astounding 100 times larger than what “normal” lobbying firms have at their disposal, whose social proximity and access to its lobbying targets is much deeper and more expansive than for conventional lobbyists, while the integrity infrastructure that governs these relations is much lighter and much less transparent.

Hard to imagine? Probably.

But as I show in a new working paper this is squarely the case when it comes to corporate influencing of the judiciary and to the law firms that drive most of this engagement.

Now at first sight this may sound like an unfounded claim. Isn’t the judiciary constitutionally powered up for integrity and independence and institutionally protected from special corporate influence through a myriad of detailed rules and procedures. There are strict standards for what counts as evidence, for who can and must be heard when, for how judgements are meant to be arrived at. There are long tenures for judges and there is judicial self-governance flanked by strict prohibitions to even speak with judges during trials outside the formal proceedings. Doesn’t all this make corporate lobbying and other special interest influencing (outright corruption and political capture aside) all but impossible?

This plausible line of reasoning is at the root of why corporate judicial activity and business influence on the justice system have been largely overlooked. Unfortunately, this premise is largely incorrect, both conceptually and empirically and with grave consequences for risks of undue influence and policy capture in many advanced economies.

As it turns out, corporate influencing of the judiciary is eminently possible, widely practiced, often much more impactful than conventional policy-level lobbying — and it is becoming ever more important in our current political context of increasing polarisation and legislative gridlock in many jurisdictions.

To make my point I draw up a framework to trace corporate influencing of the judiciary, henceforth referred to as corporate judicial activity or CJA, on four intertwined levels with regard to ideas, institutions, people and events. Pulling together data points from high-quality journalistic sources and a very fragmented literature in critical legal studies and judicial politics the emerging picture is clear: business engagement is surprisingly versatile, very prominent and highly consequential in all four of these areas. What’s more, CJA comes with a number of distinctive features that make it a particularly fertile ground for influencing and for high returns on investment.

Here just three snippets to preview some bits of the argument:

Deep roots and big pay-offs

Strategic corporate political engagement with the judiciary beyond lobbying can be traced back to the origins of modern, collective business lobbying in the early 1970s and foundational strategizing in the US about how corporate interests can push back against the upcoming consumer movement. Cultivating access is more economical than in conventional lobbying as there are much fewer key players in the judiciary that typically enjoy much longer tenure than their peers in the legislative and executive branches of government. Ideational entrepreneurship by seeding legal ideas and theories through extensive training, think tank and research sponsorship is a hotspot for engagement in many countries. And it promises exceptional pay-offs when such ideas become hardwired into legal doctrines that do not just sway a particular case but that guide judicial outcomes and indirectly shape the wriggle room for legislative and executive action for years, often decade to come. The narrow consumer welfare doctrine in competition law in the US is perhaps exhibit A for this situation. Birthed and raised with heavy business sponsorship and directly targeted at the legal community as the bulk of competition law in the US is judge-made it is the ideational underpinning for a seemingly inevitable narrow, hands-off approach to competition policy that has dominated regulation around the world for several decades to the benefit of large business conglomerates.

A surprisingly soft integrity infrastructure

Out of 41 countries assessed in a recent OECD report only six even cover the judiciary in their rules for lobbying transparency. And even where this is the case, such coverage is rudimentary. The famed US lobbying disclosure regime largely exempts the judiciary branch of government. Most rules frameworks elsewhere also offer generous exemptions for law firms that lobby although they are the main agents of CJA. A particularly insightful anecdote comes from Austria, where one of the main lawyers’ association lobbied for the judiciary to be included in the lobby register, yet to no avail. Meanwhile most asset, income, interest disclosure frameworks for judges remain even more poorly designed and enforced than for other branches of government. As a result, special interests can wine, dine or retain as consultants (some German high court judges even double their official income through outside employment) with very little transparency or enforceable conduct rules governing these transactional relations. In some instances the general principle of accountability seems even reversed: The higher and more powerful the judicial representative, the lower the enforceable public accountability standards are, as commitments to judicial self-governance and independence supersede many checks-and-balances that are the norm for the executive or legislative branches of government

And a super-agent to drive it all

Conventional lobbyists are paid for their time, not in proportion to the financial gains they secure for their clients as the latter may encourage overly aggressive or borderline illegal tactics. Contingency pay for lobbyists is frowned upon and in many jurisdictions explicitly banned. Yet, the dynamics are very different for big law firms that are the main service providers for corporate judicial activity. If successful in tweaking procedural rules in law reform, in influencing doctrinal interpretations or in helping architect privately-governed alternative justice mechanisms, such as arbitration tribunals that handle many more legal disputes than are processed through trials, these law firm influencers can open up completely new markets and service lines for themselves. They are thus uber-incentivised to proactively cultivate access, engage in lobbying for business-friendly justice architectures or engage in the nitty-gritty of highly technical, yet very impactful law reforms as these firms are the main bundlers and beneficiaries of the pay-offs that flow from these activities. Add to this financial firepower that turns lobbying expenses into incidental rounding errors- big law firms boost revenues that reach USD 4 billion compared to the USD 40 million of the biggest pure-play lobby firms. And finally keep in mind the existence of a revolving door on steroids — both lawyer lobbyists and lobby targets in the judiciary enjoy exceptional cultural and social proximity rooted in identical professional identities and the very same educational background at a handful of elite universities, while signing-bonuses of often well-above hundred-thousand dollars further grease the switching from public to private employment, as well as secondements into public service.

These are just three examples that illustrate some of the interesting features and dynamics that make corporate judicial activity a fertile area for both more research and policy engagement. I elaborate these examples in more detail and catalogue many other in the related working paper on corporate judicial activity. For now the bulk empirical vignettes are drawn from the US where most of the nascent research on these issues is taking place. Yet despite some idiosyncrasies, the US is more canary-in-the-coalmine than exceptional outlier with regard to the CJA agenda. I also identify a critical mass of related data points from other countries, including civil law jurisdictions. This makes it safe to infer that corporate judicial activity, even when expressing itself in context-specific ways, is an issue across many jurisdictions that deserves much more attention from anyone interested in lobbying and money-in-politics issues. And given the overall tableau of evidence and the many ways that CJA interacts with conventional corporate political activity it is not a stretch to conclude that understanding contemporary business influence in society and turning it into a force for good requires probing more deeply and recognizing much more prominently the phenomenon of corporate judicial activity.

Zinnbauer, Dieter, Corporate judicial activity (November 8, 2022). Working Paper, available at SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4271440