August 16, 2010
The Southern District of New York Offers Riches
Posted by David Zaring

I've grown interested in the revolving door - when employees leave government service for the private sector and go back again - because I think it is substantially less corrupt than bland versions of public choice and capture theory would have it.  To that end, I've been perusing the fates of lawyers in the US Attorney's Office in the Southern District of New York - the Manhattan bureau that takes down (or lays off) white collar finance industry defendants like Michael Milken or Ivan Boesky - the latest cases have been against KPMG, and, notably, no one involved in the financial crisis. 

It's pretty interesting.  The resumes are outstanding - ten years ago, there were four out of 150 odd of the prosecutors in the office who clerked for the Supreme Court, now about as many are judges, two are U.S. Attorneys, and the large majority of the rest are partners in white shoe firms in New York.  My guess is that a gig in the Southern District is the greatest path to wealth maximization in the federal government that there is - I say this impressionistically, of course, but the fact is that the financial regulators rarely get picked up by investment banks, and the SEC enforcer to partner rate is pretty low.  And I think lobbyist salaries don't match New York law firm salaries, while Pentagon procurement officials have far too difficult a tournament to win to get the payday of a job with Boeing.  Which makes white collar the straightest path to law firm style riches.  (I could be wrong about a number of these suppositions, of course.)

That right there is pretty interesting, since crime never used to pay, either for the defendants or their lawyers.  My suspicion is that the renumeration due to SDNY attorneys is a function of beefed up white collar enforcement, including the explosion of FCPA, and honest services fraud actions.  It would be interesting to track the paydays of former prosecutors over time by the number of cases brought against corporate executives (was it lower in the 60s?  did a Supreme Court opinion broadening fraud rules contribute to the future bottom line of Manhattan prosecutors?  &c.).  Indeed, though I don't believe this could be the case, new kinds of financial enforcement could simply be examples of SDNY lawyers feathering their future nests.  If you have views on this, since I'm noodling around on the issue, I'd love to hear them.

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