Ethics Today

Law Tomorrow
Dr. C.V. Chen
9 May 2014

calligraphy by Admiral Liu Ho-chian

1

The concept of Datong, or Great Communion, comes

from the chapter Conveyance of Rites of the Book of Rites, a
classic text of Confucianism.
Datong describes an ideal state of human existence and
society where
love and cooperation are practiced freely,
peace and prosperity are enjoyed by all, and
prejudice and war have long been abandoned.
This state is called the World of Great Communion.
In the modern context, Datong encompasses political,
economical, technological, and cultural unity.
L&L's vision for the World of Great Communion

It is Dr. C.V. Chen's belief that the "Rule of Law" illuminates

the path to justice and harmony.
2

About Me

1972
2000-2012
Returned to Taiwan
Stepped down as
1949
Began teaching &Daughter marriedPresident of R.O.C.
Came to Taiwan.
private practice.
Red Cross
1971
Father died in battle
Taiwan lost
1974 Daughter Born 2004 Mother Passed Away
1963
U.N. membership 1982
2009
National Taiwan
Son Born (severely mentally
Cancer
University
handicapped)
Married
*Law professor
*Private practice
1970
1972
*Straits Exchange
Harvard
Foundation
LL.M. S.J.D.
*Red Cross

1967
1944 Graduated
Birth from NTU
1969 LL.M.
University of British Columbia.

1989
Received Order of
Resplendent Banner with
Special Cravat

2003
SD/Fox
Incident

2012
Received Order of
Brilliant Star
with Grand Cordon

Outline
I

Staring into an Abyss : A Story

costing US$100 Million

II

Ethics Today, Law Tomorrow

and the Day after Tomorrow?

III

Can Ethics(Law) Be Taught?

US$100 Million
13 October 2003

Photo/ Flickr.CC/Ervins Strauhmanis

https://www.flickr.com/photos/ervins_strauhmanis/9544847065/

Facts

San Disk held 127.8 mm shares in its OEM, United

Microelectronics Corporation.
L&L was SD's attorney authorized to file investment
applications with TW Govt.

SD paid US$83 mm for those shares.

US$106 mm was their worth on the market in Sept 2003.

Liu, an assistant, went on unpaid leave on the pretext

of the upcoming bar exam.
In October 2003, Liu forged documents to withdraw all
shares of SD from brokerage agency, sold the shares ,
and fled Taiwan on a fake passport.
He took off with US$92 million.

Photo/ Flickr.CC/Ervins Strauhmanis

https://www.flickr.com/photos/ervins_strauhmanis/9544847065/

In 2003
Lee and Li was 38 years old

Had 14 Partners
500 Staff
12,000 Clients Worldwide

The Abyss

US$83 million~US$106 million

Photo/ Flickr.CC/Ervins Strauhmanis

https://www.flickr.com/photos/ervins_strauhmanis/9544847065/

Bargain with
SanDisk?

Will staff
abandon
ship?

Dodge the
Responsibility?

The Dilemma
Photo/ flickr.CC/ Nathan Siemers
https://www.flickr.com/photos/nosha/2980362505/

The Settlement: US$86 million

US$18 million

1 m/year

Legal Fees

Pro bono
~2021

US$20 million
2003 down payment

US$48 million
Over 4 years L/C
~2007

Photo/ flickr.CC/ SalFalko

https://www.flickr.com/photos/nosha/2980362505/

2004~2021 US$1,000,000 /year

To defray

Legal fees

Public interest initiatives

Charity work

Photo/ flickr.CC/ SalFalko

https://www.flickr.com/photos/nosha/2980362505/

Traumatized L&L
Emerged as an Iridescent Pearl

An explanation of the settlement reached between L&L and SD

Economic Daily News 17 Nov 2003

A satisfactory and productive settlement

One Thanksgiving: SanDisk's Trust
One Lesson: As you sow so shall you reap
One Reflection: No Lee & Li without Trust
Support from Society Sustains Lee & Li

One Thanksgiving
One Lesson
One Reflection

SD VP & General Counsel:

"We do not believe that
the acts of a single rogue
employee should alter the
40+year solid reputation of
one of the regions premiere
law firms."

L&L and SD Honored CSR

Despite Grave Predicament

Commercial Times 18 Nov 2003

Considerations

behind Decision Making

Photo/ flickr.CC/ Nathan Siemers

https://www.flickr.com/photos/nosha/2980362505/

Business School Case Studies

Kellogg-HKUST & Ivey-NCCU

How did
L&L handle
SD Crisis?

How did L&L

demonstrate
ethical
leadership

On the
Settlement?

The
role of
corporate
culture?

How can
loyalty and
commitment
be fostered?
Photo. Flickr CC/ PromoMadrid
https://www.flickr.com/photos/promomadrid

There Was No "I" But "We"

A law firm is a group of people
24

Dec 2004

Photo/Flickr,CC/ Pablo Twose Valls

https://www.flickr.com/photos/twose/887903401/

We
Care

We
Serve

We
Excel

L&L CORE STRENGTH-OUR PEOPLE!

The Way

The river is tranquil and yet dynamic.

It parts around a boulder and yet erodes it.
There is action in inaction.
There is force in non-force.

Jeffrey Hsu, L&L

1965~2003 Pro Bono

Volunteerism
Long-Term Supporter of Red Cross
Legal EducationBoth Sides of
Taiwan Strait

*including teaching and L&L Moot Court

project

(ABA Journal / December 2000)

1999 L&L Educational Foundation

promotes rule of law education.

Created with endowment from L&L
and continues to be funded by the
L&L partnership

1965~2003 Pro Bono

2001 L&L
honored with
Pro Bono Law Firm
Award

2008 Dr. C.V. Chen
honored with
Pro Bono Lawyer
Award

(ABA Journal / December 2000)

1965~2003 Excellence & Integrity

Excellence in Legal Practice/ KM

Judicial Reform Efforts
Drafted Bills to Boost
Taiwan's Socioeconomic Growth
Named Honest Taxpayer 3 times

(Recognition given out only between 1983~1985)

( Spring 2005)

Lesson Learned:
Lee & Li Is Founded on Trust
Embedding Public Interest in L&L's DNA
2004 Partnership restructured, pro bono
commitment reduced to writing in new
partnership agreement.
No less than 2% profit
earmarked for

public interest & employee benefits

Lesson Learned:
Lee & Li Is Founded on Trust

2013 L&L Educational Foundation launched

the Lee & Li Classroom
a series of lectures on law that is free to the
public.

2014 50th Anniversary

Past, Present, & FUTURE

Lee & Li after Baptism of Fire

Ethics/LawHelp Us
Do the Right Things Right
Law serves to keep us from
wrongIs that enough?
Ethics pushes us beyond legal minimum

Start with legislative intent

Cultivate strong FIRM culture
Pursue specialization, integrity, and
trust

II. Ethics Today, Law Tomorrow

and the Day after Tomorrow?

Business, Laws, Ethics

Ethics & Law: What's the Connection?
Harmonization of Laws (Ethics included)
A Reflection on Teaching in Law/Business Schools

Business in China
Xia
C.2200-C.1750 B.C.

(including Mainland China & Taiwan)

Wang Hai (ancestor of founder of Shang

st
Dynasty) 1 businessman in China

Shang
C.1750-C.1040 B.C.

Ended Xia Dynasty by outperforming in trade

Western Zhou
C, 1100-771B.C.

Many famous businessmen: Tse-Gung, Confucius's

disciple; Fan Li, officer-turned-business tycoon of the
state of Yue; Bai Kuei, a politician and business tycoon
of the Warring States Period

Sping & Autumn Period

Warring States Period

From Qin (221-206 B.C.)

onwards

Inferiority of businessmen in the social

hierarchy of scholars, farmers, craftsmen and
businessmen

Late Qing Dyansty to the early

Republic

Break through of capitalism; rise of

commercialism

Rising
Social
Status
of
business
-men

Planned
economy
Free
economy

Relocation of
the Republic
Government
to Taiwan

Surpression of
Establishment
of P.R.C.

private business
Policy reforms/
liberalization rising
social status of
businessmen

China

Business

(including Mainland China & Taiwan)

Scholars
Farmers
Merchants

Craftsmen
Merchants

15th Zheng He's Expedition

Commerce and Trade Flourished

Scholars become merchants

Confucius's Ethics

18th Qing Dynasty

Closed-door policy
Ban on maritime trade

15-16th

Rise of
Merchants

The West
the social hierarchy

Clergymen
Nobles
Knights
Freemen
Peasants/Serfs

14-16th Renaissance
16-17th Protestant Reformation
Rise of the middle class
Merchants
Ethics
Protestant Ethics
15-17th Age of Discovery/Maritime exploration
new ocean routes; trade expansion

16-18th Mercantilism

19th Late Qing Dynasty

Rise of commercialism

18th Industrial Revolution

Socialism
Capitalism
Planned Economy 20-21th Market Economy

Global
Economy

Merchants

How Rule of Law Came to Be

East

West

Agricultural

Social issues arose

after industrial
revolution

Industrial

Ethics
alone no
longer
adequate
Photo.Flickr,CC,John Cooper,
http://www.flickr.com/photos/atomicshed/311082285/

Person +Books/Order

Ethics

Ethics in Chinese
Bringing order to human relationships.

Wheel

Ethics in English
The morals of a culture that often
influence laws.
Human pic, http://www.fantizi5.com/jiaguwen/view/232.html
Book Photo, from wikipedia.org

Water =

Law in Chinese

=
get rid of

The original form of the Chinese character for

law consist of symbols representing water and a
mythical unicorn capable of identifying people
whose integrity is questionable.
The even surface of a body of water symbolizes
fairness, impartiality. .

Law as defined by Black's Law

Dictionary6th edition
A body of rules of action or conduct prescribed
by controlling authority, having binding legal
force.
_Pixelmaniac_,http://www.flickr.com/photos/_pixelmaniac_/4569185046/

According to Yassa, scouts who returned

with bad tidings shall be beheaded.
Business operators often dismiss legal
advice that is not pleasing to the ear.

Photo/ Flickr.CC/ Ludovic Hirlimann

https://www.flickr.com/photos/lhirlimann/6076981200/

Law Cannot and Should Not

Be Dismissed in Business.
Individuals have personalities.
But under the law, corporations have fictitious
personalities and are considered legal persons.

Business & LawsDomestic

Thoughts
of the
Management

Sound Knowledge of
Domestic Law

Laws on Environmental
Protection, Waste Disposal,
Pollution, etc.
Production
Consumer
Protection Law, Fair Trade 6
Law, etc.
Marketing

Company Act, M&A Act, etc.

Community
Society

Laws on Banking, Securities,

Accounting, Insurance,
Offshore Listing, etc.
Finance & Investment

Employees

Fairness

Business
partners

Nature

Corporate Ethics

Functions
of
Enterprises

Patent Law, Trademark Law,R&D

Copyright Law, etc.

Establishment and
Governance of Enterprises

Clients

Human
Resources

Labor Law, Employment Act,

etc.

Laws on Protection and

Information
Confidentiality of
Management
Personal / Corporate Data, etc.

Ethics
Law
Ethics

Decision-Making Must Include Legal

Considerations
Business
Manager/CEO/
Board
Duty

Providing Legal Consultation

Providing Legal
Consultation

Convergence of
legal advice and
business
judgment
Normal situation
Decision-ma
king
process

Emergency
Crisis
Management
process

Business
Judgment

In-house Legal
Counsel

Outside
Legal Counsel

Providing Legal Consultation

Role

Role

Set up support
system for regular
information

Set up
international
support system
for special
information

World-class business: Legal advice should be sought to

make a proper business judgment; otherwise, a misjudgment
will cause the company to suffer loss or the management to
bear personal liability.

II. Ethics Today, Law Tomorrow

and the Day after Tomorrow?
Business, Laws, Ethics
Ethics & Law: What's the Connection?
Harmonization of Laws (Ethics included)

Ethics & Law: What's the connection?

Morality

Photo/Flickr.CC/ Carl Jones(Cut Part)

https://www.flickr.com/photos/_belial/4881763904/

Norm System
Dynamic Wheel

Ethics & Law: What's the connection?

Morality
Ethics

Photo/Flickr.CC/ Carl Jones(Cut Part)

https://www.flickr.com/photos/_belial/4881763904/

Norm System
Dynamic Wheel

Ethics & Law: What's the connection?

Morality
Ethics
Law

Photo/Flickr.CC/ Carl Jones(Cut Part)

https://www.flickr.com/photos/_belial/4881763904/

Norm System
Dynamic Wheel

Law and Ethics are

Complementary
and Interdependent

Ethics

Law

Law

Ethics

Law's Inherent Inadequacy

Today's Law Is Obsolete Tomorrow
Lester Thurow (MIT)

New laws are like generals fighting the

previous war.
New laws cannot prevent fraud because
loopholes in the new laws could be exploited.

Andrew Fastow (Enron)

Rules versus Principles: How the ambiguity and

complexity of laws and regulations breeds opportunity
for problematic decisions.
"Not only follow the rules, but also uphold the
principles behind them."
(Photo)Fastow, by Washington Post
Thurow, from http://web.mit.edu

Law's Acquired Inadequacy

Three Branches of Govt. May Fail

Reactive
Judiciary

Unrestrained
Executive

Idle Legislature

Inherent adequacies
can be remedied. But
human failings lead to
acquired inadequacies.
Those practicing law
should study ethics,
which includes
understanding
legislative intent and
policy with
CONSCIENCE.

Photo/ wikimedia.org

Eternal Wisdom
"If the People be led by laws, and uniformity sought to be given them by
punishments, they will try to avoid the punishments, but have no sense of
shame."

"If they be led by virtue, and uniformity sought to be given them by the rules of
propriety, they will behave with the sense of shame, and moreover will become
good." Confucius, BC 500.

II. Ethics Today, Law Tomorrow

and the Day after Tomorrow?
Business, Laws, Ethics
Ethics & Law: What's the Connection?
Harmonization of Laws (Ethics included)

Business & LawsDomestic

Thoughts
of the
Management

Sound Knowledge of
Domestic Law

Laws on Environmental
Protection, Waste Disposal,
Pollution, etc.
Production
Consumer
Protection Law, Fair Trade 6
Law, etc.
Marketing

Company Act, M&A Act, etc.

Laws on Banking, Securities,

Accounting, Insurance,
Offshore Listing, etc.
Finance & Investment

Functions
of
Enterprises

Patent Law, Trademark Law,R&D

Copyright Law, etc.

Establishment and
Governance of Enterprises

Human
Resources

Clien
ts
Commun
ity
Society

Employe
es

Fairness

Busine
ss
partne
rs

Nature

Labor Law, Employment Act,

etc.

Laws on Protection and

Information
Confidentiality of
Management
Personal / Corporate Data, etc.

Ethics
Law
Ethics

Business & LawsTransnational

An enterprise should have sound knowledge of the domestic
laws of a country when doing business in that country, and if
applicable, have knowledge of transnational law.

Think globally and act locally

- understanding the regulations related to corporate governance
and the 6 major functions of business management of the
country concerned.

Ethics Today, Law Tomorrow

Space Axis: Accelerating Globalization

Ethics
Law
Ethics

Business & Law

Time Axis: Ethics
Becoming Law

Globalization Spurs
Harmonization of Law
Post-WW II
Institutionalized multilateral cooperation regimes

Multilateral covenants

Universal values in form of Law (ethics included)

Ethics
Law
Ethics

Ethics

LAW

Ethics
LAW

Incompatibility
in Transnational Law Setting
Developed Nations
Rule of Law Taken Root

Developing Nations
Immature Rule of Law

Pic,by(Tony Auth)
http://creartivism.com/cartoons-about-nike-sweatshops/#2

Example 1

Code of Ethics

of Multinational Corporations

PRADA's Code of Ethics: The Value of . . .

Competition

Market Economy

People

Worker

Environment

Air

Fairness
Anticorruption

Consumers

Water

Respect for competition, as a crucial instrument for the

development of the economic system.

Example 2

Labor Is Not a Commodity

Labor-Related
Legislation

Labor Law

Slave Labor

U.N. ILO
Covenants

L&L Practice
1998-2014

Child Labor

Example 3

Fair Competition Laws

Fairness: Core of corporate ethics

19th century U.S.Antitrust Act

End of 20th century Taiwan: Fair Trade Act

(2009 Case) Asia LCD Price-Fixing

Prevent
inappropriate
concerted
action to fix
prices

Antitrust
Act

Impact on
other
nations'
legislation

Example 4

Foreign Corrupt Practices Act

Ethics

1976 Lockheed Corporation

Law

1977 U.S. FCPA

Transnational Impact

1988 OECD Members

Global Harmonization

2003U.N. Convention against Corruption

Example 5

Environmental Protection

Kyoto
Protocol

RoHS

Carbon
Trading

Environmental Protection

Corporate Social Responsibility

Law

Obligations
Sanctions

Ethics

Social Responsibility

No Sanctions
(Media/consumers/NGOs)

Non-binding Today,
May Be Binding Tomorrow

Breach of ethics may trigger

penalties in law

Through a free press, the
people see everywhere.

Ethics ? Law
The Day after Tomorrow
An Inconvenient Truth . . .
or

Convenient Fiction?

Photo, Flickr, CC, Patrick Hoesly

https://www.flickr.com/photos/zooboing/5426098861/

Ethics Law
L

L
L

An Inconvenient Truth . . .
or
Key to Sustainable Development?

Photo, Flickr, CC, Patrick Hoesly

https://www.flickr.com/photos/zooboing/5426098861/

Wheel in Motion!

III
Can Ethics Be Taught?
Thomas R. Piper

Baker Foundation Professor

Harvard Business School

Students have a strong sense of positive values, but

have not yet had an opportunity to apply those
values in an organization.
Allen S. Grossman, LCA faculty

(Leadership and Corporate Accountability, Harvard Business School)

2006.Set-Oct

12 May 2007

Many agreed with one commentator that the only way

to solve the ethical problems of corporate America was to
fire everyone under 35 with an MBA.
Because they were not taught business ethics.

As business schools start

to teach more ethics and
practical skills, enrolments
are climbing again.

Schools Try Philosophy

to Get B-School Students

Thinking Beyond the Bottom Line

April 30, 2014

. . . But People Never Learn

2001 Enron
2002 WorldCom
2005 AIG Inflated assets

American International Group

What next?

2008

Siemens AG (800 mm) Foreign Corruption

Bernie Madoff Ponzi scheme
Three Deer Toxic baby milk

2011 IBM, GlaxoSmithKline . . . Foreign Corruption

2014 AVON . . . Foreign Corruption

SUMMARY
Observation 1

Seeing Ethics and Law

in a Different Light
"Ethics Today, Law Tomorrow"
the Day after Tomorrow
"Ethics Law"
Law Requires Ethics at Its
Core to Operate

Observation 2

Harmonization of
Transnational Laws

Universal values need to be backed by law.

Harmonizing ethics into law to produce "universal
Connect values in form of law."
Interdisciplinary cooperation (theology, science,
medicine, business management, etc.)
Businesspeople have greatly elevated their social
Integrate
stature.
Lawyers played an instrumental role.
Ethics and law, in equal measure, need to be taught
and learned.
Educate The wheel: Conscience is the hub, ethics are the
spokes, and law is the rim.

Observation 3

An Inconvenient Truth May Be the Key to

Sustainable Development
Business
Manager/CEO/
Board

Providing Legal Consultation

Providing Legal
Consultation

Duty

Convergence of legal
advice and business
judgment
Normal situation

Emergency

Decision-making
process

Crisis
Management
process

Business
Judgment

In-house Legal
Counsel
Role

Outside
Legal Counsel

Providing Legal
Consultation

Role

Set up support
system for regular
information

Set up
international
support system
for special
information

World-class business: Legal advice should be sought to

make a proper business judgment; otherwise, a
misjudgment will cause the company to suffer loss or
the management to bear personal liability.

What Is a World-Class Business?

Consumer
Consciousness

New Model of World-Class Business

Enhanced by Self-discipline

Enhanced by
Law

Convergence

Utility

Profit

Benchmark of Enterprise Value

Utility
Separation

Profit
Chaos & Disasters

Ethics Law

Modern Way to Great Communion?