Trust and law's facilitating role.

INTRODUCTION

In Should We Trust in Trust? Professor Koehn has succeeded in her goal: "to open up some areas for further research by persons in a variety of disciplines."(1) She challenges us to realize that only by reflecting more deeply upon

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In keeping with this special issue's purpose of fostering dialogue between legal scholars and philosophers, I would like to raise comments from the perspectives of legal practice, legal philosophy, and legal doctrine. I begin by relating three vignettes involving trust from my practice of law. Turning to legal philosophy, I raise a cautionary note regarding the ambiguity of "shared values" in the concept of trust. I then demonstrate some ways in which legal doctrines can assist us in fostering trust.

TRUST AND LEGAL PRACTICE

In legal practice the risks and opportunities of trust are readily apparent. To illustrate this, permit me to relate three short vignettes.(2)

Case One: An elderly woman, a thirty-five-year client of my

three-person law office, called just a few weeks into my career. Her sister

had been seriously injured in a car accident and was on life-support

systems. In the absence of the senior partner (my father), she asked

me if she should remove the life-support systems. She assured me

she would do whatever I recommended.

Case Two: In my ethics classes, no person is viewed as more

untrustworthy than a car dealer. But "Earl," a car dealer in my

hometown of 800 residents, was one of the most trusted persons in

the community. Earl did not negotiate price. You told Earl what

you wanted and he told you the price for which he could sell it.

End of negotiation. Earl had every reason to be trustworthy. That

is the kind of person he wanted to be. More cynically, if he did

start cheating people, the news would be the talk of the local greasy

spoon located one hundred yards away and his reputation would be

lost. No doubt there was a connection between these two motivations,

but the point is that Earl would not be dishonest and therefore

people reposed tremendous trust in him.

Case Three: Members of a family business were at significant odds

with one another. Having passed through successive generations,

the original, tightly knit family was now spread out all over the

country and was about as diverse as can be imagined within any

single family. Recriminations among family members were frequent

and sharp until, under the direction of a consultant, they wrote and

talked about the family stories they found inspirational. These were

stories of their daily lives told by the family's teenagers and

septuagenarians alike. Every member of the family found someone to

bond with in every story. Often they completely disagreed with the

values expressed, but they were able to identify with pain, fear,

some values, and above all, the willingness to be vulnerable to

others. The pre-meeting comments that no one could "trust" others

in the family disappeared to the extent that now, a couple of years

later, the family cannot remember why they ever needed a consultant

to help them: Didn't they always "trust" each other?

These brief vignettes exhibit a "thick" notion of trust. By "thick" I mean that individuals trust another person because of the entirety of that other person rather than because of agreement on one or two common elements. Such a "thick" notion of trust entails both a self-critical accountability (that is, the willingness to scrutinize the reasons underlying a person's attitudes) and an awareness of the multiple reasons and criteria by which individuals come to trust others. Both of these elements are important for an account of in whom and how we should trust.

TRUST, SHARED VALUES, AND LEGAL PHILOSOPHY

Professor Koehn makes two nearly incontestable arguments. First, trust is inevitably necessary in some form. No set of contracts or regulations can fully depend on enforcement mechanisms. At some point, we have to trust people. Second, the "who's the client" question (determining whether one's client is, for instance, the corporation, the CEO of a corporation, or the shareholders of a corporation) is a central one for any profession and a clear understanding about client identity is indispensable for any clear notion of trust.

The trickier subject she raises is that of shared values. Indeed, Professor Koehn recognizes this explicitly throughout her article. If there is one continual theme in the article, it is that trust on the basis of shared values can be prejudicial but instead needs to be self-critical. She rightly warns that sharing a common concern is not always good (a shared belief in racism, for instance). To have moral reasons for being confident in "trust," one must challenge the basis for the trust. One must be self-critical.

Thus, in Part One of her article, Professor Koehn argues that definitionally, trust cannot simply be considered interpersonal, in part because the shared values involved in an interpersonal relationship could be those of hating outsiders. In Part Two, she cautions about valuing trust for the instrumental reason of producing social capital or the good life, because doing so may not engender healthy self-criticality. We will continue to gloss over the problems of perspective and trust only in narrowly confined ways. In Part Three she similarly argues that in the identification of the trustor and her object, there is a danger of making trust into a criterion such that, if one does not trust (or does not trust the same things or in the same ways), one may be determined to be less worthy.

In each of these instances, she argues, there is the problem of racism and cronyism. These are real problems. My difficulty is not with Professor Koehn's warning of them, but in her posture of self-critical rationality. Rationality, she argues, assists in developing a behavior that is worthy of trust. Thus, "if our `willed trust' enables us to establish and maintain friendships with persons who, like us, are willing to explain and critically scrutinize both their and our behavior, then we can jointly evolve a process for keeping ourselves worthy of genuine trust."(3)

In other words, we ought to "share" the value of self-critical rationality. This analysis is reminiscent of the recent debates among legal philosophers about the role of religion in political life. Reacting to the claim that those with strong religious beliefs ought not participate in public, political debate because religious values are not "shared," legal philosopher Michael Perry argues that to allow only those values that are "shared" to participate in the political debate works an unfairness to those who do not share those values.(4) A further danger, as Professor Koehn also recognizes, is that shared values carry with them the danger of oppression.(5) Perry argues that those with strong religious beliefs ought to be allowed to contribute to public, political debate and could do so effectively by utilizing an "ecumenical politics" that acknowledges the values of "fallibility" and "dialogue."(6) In other words, if those with strong religious beliefs understand that their positions are not infallible and if they are willing to dialogue with others rather than impose their values, religious individuals can foster rich public discourse. These are traits similar to Professor Koehn's notions of self-critical rationality and being open to dialogue with others who are also self-critical and rational.

Perry was attacked, however, by another legal philosopher, David Smolin. Smolin argued, and Perry eventually agreed, that Perry's proposal amounted to an imposition of Perry's kind of religion as opposed to an imposition of Smolin's, which did not value fallibility and dialogue.(7)

Let me be clear that, like Professors Koehn and Perry, I agree that self-critical rationality, fallibility, and dialogue are positive values and are helpful in avoiding racism and violence. I also wholeheartedly endorse the warning about the moral insufficiency of shared values. My cautionary point stems from the contention that:

Because further circumstances may arise that call into question your

good will toward me, what justifies my trust in you now? A reasoned

policy of willed trust goes some way toward answering that question:

I trust you now for exactly the same reason I will trust you in the

future -- namely, that you, like me, have shown yourself to be willing

to subject your position to the test of critical argument.(8)

Professor Koehn's contention is also based on shared values. It is based on an individual's self-criticality, which places individual, rational determination and responsibility above social determination and responsibility of values. Not only might a religious fundamentalist like Smolin reject the moral superiority of self-criticality but so might theologian Peter Paris who writes:

Though difficult for Western minds to grasp, Africans have no

conception of person apart from the community.... [T]his communal

view of personhood does not imply the devaluation of individuality.

Rather it implies that the value Africans bestow on individuals is

not the primary good. Instead, in the order of moral importance,

the corporate community always assumes priority over individual

members.(9)

The point is simply to caution that self-criticality depends upon another set of shared values. Once the debate becomes one of which shared values to institutionalize, the question of which values are most appropriate arises. When trying to determine what is most appropriate, one runs the risk of discriminating against those who do not share one's values. This can then lead to discrimination against those who do not share the value of self-critical rationality.

Perry suggests that the proper approach is to allow people to use any religion in public debate(10) and, in a parallel fashion, to allow people to trust in whatever they find appropriate. Such values preserve the ability to critique oppression; a community that oppresses its members is no community at all.(11) In short, Professor Koehn is correct in stating that self-criticality is an approach that, when institutionalized as community life requires, protects against the very real dangers of which she warns. It is important, however, to remember that the approach can also lead to a bias against those who do not "share" such confidence in rationality.

TRUST and ITS SUPPORTS IN LEGAL DOCTRINE

Let us assume that a self-critical rationality provides the best mechanism for engendering trust and that, in using it, strategies ought to be developed so that trust flourishes. This is Professor Koehn's fourth aspect of trust. Because her first three aspects return us to the question of shared values (of which the reader is likely to be weary now), let me begin at the end: trust as a matter of policy.

Willed Trust or Trusting As a Matter of Policy

Professor Koehn cites Ghandi and James as examples of those who simply made trust a part of their policy. Ghandi and Martin Luther King, Jr. demonstrated the political and legal efficacy of the approach. It is a strategy that promotes self-criticality because it keeps a person's mind open to that which is going on around her. A trust that places its confidence in others keeps one open to the large range of ways in which one can foster friendship. If I look for ways to trust you, I can probably find them and build a relationship with you on them.

When one abandons trust as a matter of policy, the categories by which one evaluates trust narrow. That is, trust becomes an issue of contract. We trust on the basis of the particular thing we agree upon rather than our commitment to finding things upon which we agree. When one trusts based only on a history of performance and meeting expectations, one reduces the elements of goodwill, potential, and creativity that may be offered and focuses on the "thing" being contracted. The narrower the terms of trust, the easier it is for rules to become legalistic(12) and the easier it is to find the one thing that unites two or more parties in a trusting relationship. That process could include the dangers of racism and oppression of which Professor Koehn rightly warns.(13)

Willed trust (i.e., trusting as a matter of policy), on the other hand, is open to a variety of ways in which trust can be established. In the case of the family business described at this paper's beginning, ethical values were, at first, the sole criterion by which one judged the other family member's worthiness of trust. However, in discussing those ethical differences, family members found other things such as pain, fear, love, and (most importantly) a perceived recognition of a desire to want to trust one another (indicated by participating in the process of sharing stories) from which they could identify, share, and build trust. Willed trust is a thick version of trust, one that looks at the whole person and not at a single criterion. A commitment to this approach inspires mutual trust and keeps individuals open to self-critical rationality.

Institutionalization of Trust

What if one wants to live in a society in which self-critical trust flourishes? Then one must again confront the question of shared values and the rules that implement such values. Those rules, as Professor Koehn rightly warns, can become legalistic and formalistic and thereby undermine the discretion necessary for trust to flourish. Are there models that foster both order and room for trust? Does Professor Koehn's analysis point us in directions that the law ought to take? I will argue that legal doctrine does provide many instances of the kind of discretion necessary for the flourishing of trust and that Professor Koehn's insights do help us understand the advances needed for fostering trust in corporate contexts.

Contracting Relationships: Relational Approaches

Steven Salbu has argued that the doctrine of neoclassical contract "favors the less legalistic, more flexible form" more than does the traditional classical doctrine of contract.(14) As such, neoclassical contracts have more ethical content than legalistic classical contracts.(15) Ian MacNeil, for instance, argues that transactional contracts are ones of short duration, limited personal interaction, precise measure of money and goods subject to the exchange, a minimum of future cooperation, no expectation of altruism, and no entangling strings of friendship within the deal. A relational contract, on the other hand, is of significant duration. There are both easily measured and hard-to-measure terms. Such contracts involve the expectation of future cooperation and relations of friendship. There is significant pressure for virtues such as truth-telling, promise-keeping, commitment to quality, altruism, and group solidarity because the long-term interests of the parties require mutual support. Relational contracts, like those involving all three earlier vignettes, are thick: They recognize multiple criteria by which trust is fostered.

The argument is not simply theoretical. MacNeil identifies those contracts in which there are continuing relationships as areas in which there is some discretion in making adjustments. These include franchising,(16) labor,(17) and contracts that make use of independent standards to govern the life of the contract.(18) Another example is the Uniform Commercial Code. Section 2-201 provides multiple ways for merchants to comply with the Statute of Frauds in order to establish an agreement. Section 2-204(1) provides that a contract for the sale of goods can be made in any manner sufficient to show agreement, even where terms are left open. Similarly Section 2-305 allows parties to leave open even that most contentious of terms -- the price.

To the extent relational kinds of contracts are permitted, they facilitate the ways in which the law can foster trust. The UCC is highly technical, but even here there is a good deal of flexibility for agreements to be specified in the discretion of the parties. The law provides limits to what can be done, but the negotiations between the parties have a great deal to do with the incentives of merchants to operate in good faith. All law is not so open to discretion and relational contracting, but theoretical and extant models provide a basis for the ways in which the law can provide order and room in which trust and ethics claim their place.(19)

Negotiations, in fact, provide another example of how the law can promote trust. If one assumes that honesty is likely to promote trust among self-critical persons, Cramton and Dees offer the following ways in which the law can promote trust by fostering honesty: 1) Develop legal and regulatory protection to enforce honesty norms through government or industry; 2) Create institutional sources of reputational information such as better business bureaus or credit rating services; 3) Create independent rating service for products and services such as Consumers' Union and J.D. Power and Associates; 4) Utilize third party professionals such as lawyers, accountants, arbitrators, investment bankers, and engineers who can help alleviate information asymmetry and diffuse codes of ethics; 5) Standardize contractual mechanisms such as occurs through the use of warranties; 6) Develop standardized affiliations and credentials such as chartered underwriters, certified financial planners, and accountants.(20)

These legal mechanisms provide protection against the kind of cronyism about which Professor Koehn warns by providing informational mechanisms and by relying upon certain offices that facilitate trust in the negotiating process. The latter is of particular importance to Professor Koehn.

Professionalism or Office-Based Trust

The basis of Professor Koehn's defense of professionalism or "office-based trust" avoids the shared values problem by focusing on the self-critical nature of professional offices. Avoidance strategies, designed to avoid those things that would challenge shared values, are eliminated because they really do nothing to foster the kind of self-criticality the she endorses. Disclosure strategies are ultimately unworkable because the parties may not understand that which is being disclosed. If an explanation is in "code," for instance, disclosure does not clarify. Reliable institutions depend upon those things that are already determined to be reliable. In such institutions, there is no guarantee against cronyism.

Ideally, professions are designed to foster debate and criticality within their very ranks. The vocational calling, historically a part of professional service, may be likely to lead to the kind of service that commands respect and trust. In the case of professions, the law has a great deal to say about the efficacy of the institutions.

Classic Professions: The Need for Thickness.

The chief danger in professionalism is a reliance on reductionist criteria by which one's duty and success are determined. For instance, the medical profession can be viewed as a way to make a lot of money, to be intellectually challenged, and philanthropically to serve patients. In a health-care climate of economic accountability and opportunities, incentives now increasingly focus only on economic and legal duties.(21) To that extent, laws that preserve doctor-patient confidentiality and privacy stand as "sanctuaries" from the commercialization and regulation of the health care industry. Laws that recognize the moral and trusting nature of the profession facilitate trust.

In terms of the legal profession, similar economic temptations lurk. In addition, the ethical requirement to "zealously represent a client" can lead to the defense and prosecution of outrageous cases. The ethical cover for this is that everyone is entitled to his or her day in court. The discretionary nature of professionalism, however, demands that a professional's significance not be reduced to one or two criteria such as money and zealousness.

Referring to the first vignette of this paper, the client who asked the moral, not legal, question of whether her sister's life-support systems ought to be removed, "trusted" the office of "attorney" beyond its legal product. The office, solidified by the then thirty-five year practice of my father, "thickened" the criteria for her trust far beyond the requirements for economics and zealousness. That confidence was then transferred to a similarly situated person -- namely me. If the law prevents professional offices from reducing the thickness of its criteria for responsibility, it can foster trust by its institutionalized self-criticality. That is, the law undermines trust in the office of "attorney" when it focuses on narrow criteria of zealousness and economics; instead, it should encourage lawyers to meet the needs of the whole person, needs that are more complex than zealous representation of a legal interest.

Professionalism and the Corporation.

Professor Koehn's argument also provides guidance for the law in promoting more trustworthy corporations. If institutionalized self-critique engenders trustworthiness, it is worth noting that corporations engender a similar criticality when transparent to their constituents. This was exactly the approach of the car dealer in my hometown. The very nature of being a car dealer in a small town necessitated an openness to a variety of stakeholders, from employees to suppliers to customers. This transparency, together with a quite pronounced "willed trust," made him trustworthy.

It would be silly to think that large, multinational corporations would conceive of themselves in a position similar to a car dealer in a town of 800 people. But the principle is the same. Institutions that are trustworthy open themselves to criticism. Their decisions and the reasons for such decisions are open to examination and evaluation by stakeholders. Stakeholder management thus requires corporations to be accountable to questions similar to those of professions. Not only does Professor Koehn shed light on what is at "stake" in "trust," but she opens the door for understanding how such trust might be won from stakeholders.

CONCLUSION

Professor Koehn has been successful in opening areas for further research and discussion. Legal doctrine can foster the development of trustworthy practices and institutions by encouraging self-critical rationality, which is a value worth "sharing." Relational contracting models allow flexibility in ongoing contractual relationships and foster trust. From an institutional standpoint, assuring that professional responsibility is not narrowed into minimalist criteria for defining duties and success becomes the best way to assure the kind of discretion and flexibility required in organizations that are structured to be self-critical. This knowledge also provides insight for how to foster trust in the corporate world -- by requiring transparency and normative self-criticality of the institutions.(22)

(1) Daryl Koehn, Should We Trust in Trust?, 34 Am. Bus. L.J. 183, (1996).

(2) The names of the characters in these vignettes are changed or withheld.

(3) Koehn, supra note 1, at 202.

(4) Michael Perry, Love and Power: The Role of Religion in American Politics 9-19 (1991).

(5) See Timothy L. Fort, Religious Belief, Corporate Leadership and Business Ethics, 33 Am. Bus. L.J. 451, 463 (1996). This is a notion derived from the work of Jurgen Habermas who argued that language, a product of shared values, can he an instrument of oppression and domination. See Jurgen Habermas, A Review of Gadamer's "Truth and Method" in The Hermeneutic Tradition: From Ast to Ricouer 239 (Gayle L. Ormiston & Alan D. Schrift, eds.) (1990).

(6) Perry, supra note 4.

(7) See Michael J. Perry, Religious Morality and Political Choice: Further Thoughts (and Second Thoughts) on Love and Power, 30 San Diego L. Rev. 703 (1993).

(8) Koehn, supra note 1, at 202.

(9) Peter J. Paris, The Spirituality of African Peoples: The Search for a Common Moral Discourse 111 (1995).

(10) Perry, supra note 7.

(11) Paris, supra note 9, at 117.

(12) See Ian R. MacNeil, Contracts: Exchange Transactions and Relations, (2d ed. 1978). MacNeil argues that "a classical contract law system implements its goals of enhancing discreetness and presentation by limiting strictly the sources considered in establishing the substantive content of the transaction in resolving disputes and by utilizing strictly defined (and narrow) remedies. Both of these sharply conflict with relational approaches...." Id. at 930.

(13) See, e.g., Steven R. Salbu, Law and Conformity, Ethics and Conflict: The Trouble with Law-Based Conceptions of Ethics, 68 Ind. L.J. 101, 110-11 (1992). Salbu argues that the "poignancy of the social contract rests, after all, in the act of forfeiting a degree of individual freedom for an increment of social order. Ethics is the province of freedom, while law is the dominion of order." Id. at 110, n.42. This begs the question of what freedom is, but it does stand for the proposition that the contracting process moves one into the stages of bargaining rather than a voluntary posture, such as that of willed trust.

(14) Id. at 112.

(15) Id. at 112-14.

(16) MacNeil, supra note 12, at 181-209.

(17) MacNeil, supra note 12, at 10-21.

(18) MacNeil, supra note 12, at 813. These would include standards such as the Consumer Price Index. MacNeil is not naive about the difficulties that can arise in these contracts. His point is to recognize that there are legal, contractual models by which a good deal of flexibility is built into an otherwise legalistic relationship.

(19) See Thomas W. Dunfee, Extant Social Contracts, 1 Bus. Ethics Q. 23 (1991) for a fuller description of the ways in which existing legal arrangements are normative resources.

(20) Peter Cramton & J. Gregory Dees, Promoting Honesty in Negotiations, 3 Bus. Ethics Q. 359 (1993).

(21) See, Patricia H. Werhane, The Ethics of Health Care as a Business 11 Bus. & Prof. Ethics J. 1 (1991).

(22) See LaRue Tone Hosmer, Trust: The Connecting Link Between Organizational Theory and Philosophical Ethics, 20 Acad. Mgmt. Rev. 379 (1995). Hosmer provides an excellent presentation and integration of trust from the perspectives of organizational behavior and ethics.

TIMOTHY L. FORT, Assistant Professor, University of Michigan Business School. My thanks to Jeffrey Nesteruk, Daryl Koehn, and Nancy Nerad for their comments in the preparation of this paper.