Academic

As usual, my colleague Larry Ribstein is already all over the agency problems endemic with paying government prosecutors bonuses based on an annual conviction percentage (or number of convictions), as is the plan in Denver, CO.  Because of my recent foray into thinking about incentive compensation (Regulating Compensation) and whether it increases risk-taking or possibly encourages excessive risk-taking, I can't help but balk at the thought of "conviction bonuses."  A million years ago I also wrote about attorney fees for transactional lawyers, arguing that transactional lawyers should not have incentives to close a deal when they may have a duty to tell their clients to walk away (or disclose more, etc.)  Here are may thoughts, many of which have already been voiced by others:

1.  Prosecutors are officers of the court and have legal and ethical duties that have nothing to do with winning a conviction.  If we believe that option-based compensation might make officers at Enron and elsewhere fudge the numbers, then do we want that same incentive to cloud judgment about exculpatory evidence, suborning perjury, etc.?

2.  As others have mentioned, this incentive could have unintended consequences, such as prosecutors pleading out fewer cases, cherry-picking easy cases, going for "low-hanging fruit" offenses, etc.  I would hate to be facing a trial date in December.

3.  As with executive officers, whether a prosecutor wins or not turns on a lot of factors, many of which aren't related to the hard work or talent of the prosecutor.  Perhaps the police officers and detectives did a good job investigating facts, locating witnesses, etc.  On the other hand, the prosecutor may have had some tough, time-consuming trials that were lost on the facts but brought down her "percentage."

4.  The Dodd-Frank Act wants corporations to have some system of clawbacks, whereby executive officers would have to repay incentive compensation if things go poorly down the line.  Incentive compensation, particularly in financial institutions, has a timing mismatch problem whereby the profitability of certain decisions will not be determined until much after the compensation has been paid.  So, if convictions are overturned on appeal, does the prosecutor face clawback?

5.  Finally, criminal defense attorneys aren't allowed to defend cases on a contingency, so it seems strange that it would be ethical the other direction.

As Larry points out, with prosecutors, we fear that skewed incentives will impact people's liberty, not just a corporation's profitability.