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“How could you defend someone you know is guilty?”
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How would you deal with the ethical issues involved in being a criminal defense attorney? For example, how would you reconcile defending a client you knew or even thought to be guilty?
200+ words
Marquette Law Review
Volume 42
Issue 1 Summer 1958 Article 18
Ethical Problems in Criminal Defense Work
James T. Bayorgeon
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Part of the Law Commons
This Article is brought to you for free and open access by the Journals at Marquette Law Scholarly Commons. It has been accepted for inclusion in
Marquette Law Review by an authorized administrator of Marquette Law Scholarly Commons. For more information, please contact
[emailprotected]
Repository Citation
James T. Bayorgeon, Ethical Problems in Criminal Defense Work, 42 Marq. L. Rev. 138 (1958).
Available at: http://scholarship.law.marquette.edu/mulr/vol42/iss1/18
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NOTES
Ethical Problems Involved In Criminal
Defense Work
I. INTRODUCTION
There is probably no aspect of the legal profession which engenders
more misunderstanding than the attorney’s role as defense counsel in
a criminal action. The attorney is often-times subject to the most
severe criticism for undertaking the defense of an accused who is
“obviously” guilty or who has already confessed his guilt. Such criti-
cism is most vehement, of course, when the attorney is successful in
his defense and the accused is set free.
It would appear that the obvious way to avoid the greater majority
of such criticism would be an intensified educational program to make
the public aware of the rights of any accused person and the duties of
his defense counsel. This too glib answer, however, offers no solution
to the dilemma of the attorney who is informed by his client, the ac-
cused, of facts, which if put into evidence would be sure to result in
a conviction. Here again, of course, there is another obvious answer,
that is, that the attorney may simply drop the case. But to offer such
a solution in the present discussion, is merely to evade the basic prob-
lem ever present in the practice of criminal law.
II. MORAL VIEW
There appears to be little dispute as to the moral principles gov-
erning the defense of one accused of crime. The attorney may defend
the accused by all lawful means. This general principle is best stated
as follows:
“The general principle governing criminal trials is that the
accused has a right to be free from punishment until he is proved
with moral certainty to be guilty. Accordingly, the lawyer for
the defendant, even though he knows that his client committed
the crime with which he is charged, can lawfully utilize all ob-
jectively honest means to avert the verdict of guilty. . . .Of
course, he may not employ perjury, or induce witnesses to lie
on the stand. But, so long as he confines himself to facts that
are objectively true, he may present them in such a manner that
the jury will be inclined to render a verdict of not guilty.”‘.
This is so because the attorney stands in the place of the client and
may do and act in his defense as the accused may morally do himself.
It is basic that the accused has a moral right not to accuse himself.
Thus, although the accused may divulge to the attorney information of
a highly incriminating nature, the attorney is under no obligation to
“Father Francis J. Connell, C.S.S.R., S.T.D., MORALS IN POLITICS AND PRO-
FEsSIoNS, at III (Newman Bookship, Westminister, Md. 1946).
come forth with such information. Note that this is a right in a negative
sense, i.e., the attorney has a right not to furnish the information. This
cannot be extended to give the attorney a right to restrain a witness
from testifying to incriminating matters or in any other way to sup-
press valid legal evidence.
The attorney not only may defend his client by all lawful means,
but it would appear that he is duty bound to do so. For when the
attorney undertakes the defense he has entered into a contract with
the client by which he pledges himself to devote his skill and knowl-
edge, as best he tan, to defend the client against the charge.2
Thus, in the concrete situation where the attorney undertakes to
defend one who has admitted his guilt to the attorney, the attorney
may, nevertheless proceed to defend the accused by all lawful means,
and do so with the knowledge that such defense is moral and right.
Nor need the attorney have any qualms of conscience if his accused
client is found not guilty and set free, for:
“Nothing seems plainer than the proposition, that a person
accused of a crime is to be tried and convicted, if convicted at
all, upon evidence, and whether guilty or not guilty, if the evi-
dence is insufficient to convict him, he has a legal right to be
acquitted.” 3
The validity of this statement is so plain that no further comment is
needed thereon.
To this position the argument is raised that the objective of a
judicial proceeding is truth and thus the attorney, as an officer of the
court, has a duty to come forth with any and all facts which will aid
the tribunal in arriving at its ultimate goal, viz., truth. This argument,
while plausible on its face, does not stand up to a careful analysis.
Such an argument shows a basic misunderstanding of the nature of
a criminal proceeding and what it purports to judge. The state, in the
valid exercise of its police powers, has prohibited the commission of
certain acts, ranging from the prohibiiton of parking an auto in cer-
tain designated zones to the prohibition of murder. The law forbids
the act and imposes penalties on those who violate the law.
A court composed of mere men is in no position to judge the
moral guilt or innocence of another man. Whether or not there is
moral guilt, and if so, to what degree, cannot be determined by the
overt acts of an individual. Moral guilt can be determined only by
looking at the conscience of the accused, and this is something which
no court has yet been able to do. Rather, the court judges whether or
not the individual has done those certain overt acts constituting a
2 Father Henry Davis, S.J., MORAL AND PASTORAL THEOLOGY at 382 (Sheed and
Ward, New York, N.Y. 1943).
3 George Sharswood, L.L.D., PROFESSIONAL ETHIcs, at 105 (The Goe. T. Bisel
Co., Philadelphia, Pa., 1907).
1958] NOTES
MARQUETTE LAW REVIEIVl
crime. Even the elusive concept of mens rea is determined by means
of the overt acts. Thus the proper object of a judicial proceeding is
to render a decision consonant with justice, upon the evidentiary facts
set forth. Were the criminal courts of this country to attempt to
punish one for his moral guilt, it would, in effect, be an attempt to
control thought. For one may be morally guilty of a wrong without
ever having committed an overt act.4
The court, in its attempt to arrive at the truth as to whether or
not the prohibited act has been committed, has laid down certain rules
to be followed. Chief among these is that the state has the burden of
proving its allegations and that such proof must be made in accordance
with the rules of evidence. It is the duty of the prosecutor to make this
proof and the function of the defense counsel, as regards this particular
phase of the trial, to see that the rules of evidence are complied with.
Thus the defense counsel fulfills his role as an officer of the court by
seeing that the proof of the prosecution is made accordingly. It is not
within his province to assume the role of the prosecutor and come forth
with affirmative evidence of the commission of the overt acts alleged.
There is a school of thought which holds that an attorney should
decline to undertake the defense of one whom he knows to be guilty.
It would appear that any attorney espousing such a view is in a position
which contradicts itself. Witness the following statement:
“It is only when a lawyer really believes his client is innocent
that he should undertake to defend him. All our democratic
safeguards are thrown about a person accused of a crime so that
no innocent men may suffer. Guilty defendants, though they
are entitled to be defended sincerely and hopefully, should not be
entitled to the presentation of false testimony and insecure state-
ments by counsel.”5
The contradiction is readily apparent. If an attorney should defend
only those whom he believes to be innocent, how then are the “guilty”
defendants to obtain counsel, the right to which is admitted. Further,
is not the attorney usurping the function of the judge and jury by pre-
judging the guilt or innocence of the client?
II. LEGAL POSITION
From a legal viewpoint there appears to be little doubt that an at-
torney may defend one whom he knows to be guilty of the offense
charged. In fact, it may be even said that in certain circumstances
there is a duty to defend one accused of crime, regardless of the at-
torney’s personal opinion of guilt. Both the Federal’ and numerous
41MATT. 5. 28.
5 Cutler, Is a Lawyer Bound to Support an Unjust Cause? A problen of
Ethics, 38 A.B.A.J. 300, at 301 ( ).
6 U.S. CONSTITUTION, Art. 6.
[Vol. 42
state constitutions7 give one accused of crime the right to the assistance
of counsel. Perhaps the basic principle of such constitutional provisions
may be summed up as follows:
“Every man, accused of an offense, has a constitutional right
to a trial according to law; even if guilty, he ought not to be con-
victed and undergo punishment unless upon legal evidence; and
with all the forms which have been devised for the security of
life and liberty.”s
Without the assistance of counsel, many, if not all, of the rights
guaranteed to an accused would be mere paper rights, lacking substance
and meaning.
The right to assistance of counsel is itself a substantial right,9 the
denial of which is grounds for reversal of a conviction. Nor can it be
said that the right to counsel is only the right of an innocent man; there
would appear to be little doubt that even a guilty defendant is entitled
to a fair trial. 10 This being so, it is the duty of the defense counsel to
assure that the accused is given a fair trial,” be he guilty or innocent in
the eyes of the attorney or the public. 12 There is no duty upon the
defense counsel to aid the prosecution in its case, for the accused has
the right to have his guilt, if any, determined by the court and jury.’3
The state having the burden of proof, 4 the defense is under no
duty to come forth with incriminating evidence. The prosecution, how-
ever, has a double duty; the District Attorney must not only attempt to
make the case for the State, but he must also come forth with any facts
tending to show the innocence of the accused.15 This is just one ex-
ample of the numerous safeguards set up to protect the innocent. How-
ever, such safeguards are available to the guilty as well. For it must
be remembered that guilt is a legal concept, and not a subjective de-
termination made by a lawyer or the public at large, and until an
accused is found guilty by a court, he is entitled to all the safeguards
and protections afforded by law.
Thus, a lawyer in undertaking the defense of a “guilty” accused
is merely acting in accordance with his oath as an attorney to uphold
the constitution and laws of the land. For to deny any man the
assistance of counsel is to strip him of his rights and privileges as a
citizen. It is the unique role of an attorney as defense counsel to be
7WIS. CONSTITUTION, Art. I, sec. 7; CONSTITUTION OF MICHIGAN
of 1908, Art. II, sec. 19; ILLINOIS CONSTITUTION, Art. II, sec. 8.
8 See note 3 supra.
9 State ex rel. Traister v. M1ahoney, 196 Wis. 113, 219 N.W. 380 (1928).
10 Fischer v. State, 226 Wis. 390, 276 N.W. 640 (1937).
11 State v. Barto, 202 Wis. 329, 232 N.W. 553 (1930).
12 State ex re. Drankovich v. Murphy, 248 Wis. 433, 22 N.W.2d 540 (1946).
‘I3 Lonergan v. State, 111 Wis. 453, 87 N.W. 455 (1901) ; ‘Melli v. State, 220 Wis.
419, 265 N.V. 79 (1936); Parke v. State, 204 Wis. 443, 235 N.W. 775 (1931).
” Fraccaro v. State, 189 Wis. 428, 207 N.W. 687 (1926).
’15 O’Neil v. State, 189 Wis. 259, 207 N.W. 280 (1926).
19581 NOTES
MARQUETTE LAW REVIEW
engaged not only in the defense of the rights of his individual client,
but in the defense of the rights of each and every citizen of the land.
If the courts can deprive even the most despised accused of his rights
as a citizen then may it also deprive the bulk of the citizenry of the
rights afforded them under the constitution. For such rights are worth.-
less unless the courts will enforce them and the lawyers protect them.
IV. CONCLUSION
There is little question, if any, as to the right of an accused to a
fair trial and assistance of counsel. The difficulty arises in the moral
issues involved in the defense of one who has admitted his guilt. How-
ever personally repugnant the particular case may be to the individual
attorney, it must always be remembered that even the most wayward
of citizens have rights which must be protected. Chief among which
are the right to a fair trial and “due process” of law. The protection
of such rights is a moral act the accomplishment of which is an art
peculiar to attorneys. It is not only the attorney’s singular ability to
protect such rights but also his duty as a member of a profession dedi-
cated to justice. The attorney need feel no reluctance, on moral
grounds, to undertake the defense of an accused; rather, he should
undertake such a task in a spirit of service to his profession, his fellow
citizens and his country.
JAMES T. BAYORGEON
Wisconsin’s Anti-Bushing Law 218.01 (3) (a) 18 – The present
capacity of our nation’s automobile manufacturers to produce cars far
exceeds the American public’s ability to consume them.’ This excess,
coupled with the great number of dealers handling the same product
in the same market area, has forced dealers into various unethical prac-
tices. Bushing2 is but one of many such practices. However, it is also
one of the most successful.
‘On March 1, 1958 dealers had in stock a sixty-eight day supply of cars. This
high inventory (thirty days is normal) had increased from February 1, 1958
despite factories working three or four day weeks instead of the usual five
day week. Automotive News, March 1st, 1958, page 1.
2 The “bush” as it is called is set up by another practice known as highballing.
The highball was developed to get a buyer who is shopping to return to the
bushing dealership before he purchases an automobile. The following is an
example of how a highball followed by a bush enables a dealer to sell an
automobile.
Mr. Smith is looking for a new car. He has decided to buy a certain make
and model and knows the equipment he wants. Mr. Smith begins to shop
around for the best price he can get. He wants to see how little a cash differ-
ence he can pay and still get the car of his choice. Mr. Smith first stops at the
X Auto Company and receives a figure of $2400.00 cash difference from a sales-
man there. From the X Auto Company, Mr. Smith proceeds to the Y Auto
Company and by letting the figure of $2400.00 cash difference slip out, gets the
salesman at the Y Auto Company to agree to a cash difference of $2350.00. By
repeating this process at several more dealers, Mr. Smith manages to reduce
the cash difference to $2100.00 at the B Auto Company.
[Vol. 42
Marquette Law Review
Ethical Problems in Criminal Defense Work
James T. Bayorgeon
Repository Citation
Ethical Problems in Criminal Defense Work Marquette Law Review
Volume 42
Issue 1 Summer 1958 Article 18
Ethical Problems in Criminal Defense Work
James T. Bayorgeon
Follow this and additional works at: http://scholarship.law.marquette.edu/mulr
Part of the Law Commons
This Article is brought to you for free and open access by the Journals at Marquette Law Scholarly Commons. It has been accepted for inclusion in
Marquette Law Review by an authorized administrator of Marquette Law Scholarly Commons. For more information, please contact
[emailprotected]
Repository Citation
James T. Bayorgeon, Ethical Problems in Criminal Defense Work, 42 Marq. L. Rev. 138 (1958).
Available at: http://scholarship.law.marquette.edu/mulr/vol42/iss1/18
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mailto:[emailprotected]
NOTES
Ethical Problems Involved In Criminal
Defense Work
I. INTRODUCTION
There is probably no aspect of the legal profession which engenders
more misunderstanding than the attorney’s role as defense counsel in
a criminal action. The attorney is often-times subject to the most
severe criticism for undertaking the defense of an accused who is
“obviously” guilty or who has already confessed his guilt. Such criti-
cism is most vehement, of course, when the attorney is successful in
his defense and the accused is set free.
It would appear that the obvious way to avoid the greater majority
of such criticism would be an intensified educational program to make
the public aware of the rights of any accused person and the duties of
his defense counsel. This too glib answer, however, offers no solution
to the dilemma of the attorney who is informed by his client, the ac-
cused, of facts, which if put into evidence would be sure to result in
a conviction. Here again, of course, there is another obvious answer,
that is, that the attorney may simply drop the case. But to offer such
a solution in the present discussion, is merely to evade the basic prob-
lem ever present in the practice of criminal law.
II. MORAL VIEW
There appears to be little dispute as to the moral principles gov-
erning the defense of one accused of crime. The attorney may defend
the accused by all lawful means. This general principle is best stated
as follows:
“The general principle governing criminal trials is that the
accused has a right to be free from punishment until he is proved
with moral certainty to be guilty. Accordingly, the lawyer for
the defendant, even though he knows that his client committed
the crime with which he is charged, can lawfully utilize all ob-
jectively honest means to avert the verdict of guilty. . . .Of
course, he may not employ perjury, or induce witnesses to lie
on the stand. But, so long as he confines himself to facts that
are objectively true, he may present them in such a manner that
the jury will be inclined to render a verdict of not guilty.”‘.
This is so because the attorney stands in the place of the client and
may do and act in his defense as the accused may morally do himself.
It is basic that the accused has a moral right not to accuse himself.
Thus, although the accused may divulge to the attorney information of
a highly incriminating nature, the attorney is under no obligation to
“Father Francis J. Connell, C.S.S.R., S.T.D., MORALS IN POLITICS AND PRO-
FEsSIoNS, at III (Newman Bookship, Westminister, Md. 1946).
come forth with such information. Note that this is a right in a negative
sense, i.e., the attorney has a right not to furnish the information. This
cannot be extended to give the attorney a right to restrain a witness
from testifying to incriminating matters or in any other way to sup-
press valid legal evidence.
The attorney not only may defend his client by all lawful means,
but it would appear that he is duty bound to do so. For when the
attorney undertakes the defense he has entered into a contract with
the client by which he pledges himself to devote his skill and knowl-
edge, as best he tan, to defend the client against the charge.2
Thus, in the concrete situation where the attorney undertakes to
defend one who has admitted his guilt to the attorney, the attorney
may, nevertheless proceed to defend the accused by all lawful means,
and do so with the knowledge that such defense is moral and right.
Nor need the attorney have any qualms of conscience if his accused
client is found not guilty and set free, for:
“Nothing seems plainer than the proposition, that a person
accused of a crime is to be tried and convicted, if convicted at
all, upon evidence, and whether guilty or not guilty, if the evi-
dence is insufficient to convict him, he has a legal right to be
acquitted.” 3
The validity of this statement is so plain that no further comment is
needed thereon.
To this position the argument is raised that the objective of a
judicial proceeding is truth and thus the attorney, as an officer of the
court, has a duty to come forth with any and all facts which will aid
the tribunal in arriving at its ultimate goal, viz., truth. This argument,
while plausible on its face, does not stand up to a careful analysis.
Such an argument shows a basic misunderstanding of the nature of
a criminal proceeding and what it purports to judge. The state, in the
valid exercise of its police powers, has prohibited the commission of
certain acts, ranging from the prohibiiton of parking an auto in cer-
tain designated zones to the prohibition of murder. The law forbids
the act and imposes penalties on those who violate the law.
A court composed of mere men is in no position to judge the
moral guilt or innocence of another man. Whether or not there is
moral guilt, and if so, to what degree, cannot be determined by the
overt acts of an individual. Moral guilt can be determined only by
looking at the conscience of the accused, and this is something which
no court has yet been able to do. Rather, the court judges whether or
not the individual has done those certain overt acts constituting a
2 Father Henry Davis, S.J., MORAL AND PASTORAL THEOLOGY at 382 (Sheed and
Ward, New York, N.Y. 1943).
3 George Sharswood, L.L.D., PROFESSIONAL ETHIcs, at 105 (The Goe. T. Bisel
Co., Philadelphia, Pa., 1907).
1958] NOTES
MARQUETTE LAW REVIEIVl
crime. Even the elusive concept of mens rea is determined by means
of the overt acts. Thus the proper object of a judicial proceeding is
to render a decision consonant with justice, upon the evidentiary facts
set forth. Were the criminal courts of this country to attempt to
punish one for his moral guilt, it would, in effect, be an attempt to
control thought. For one may be morally guilty of a wrong without
ever having committed an overt act.4
The court, in its attempt to arrive at the truth as to whether or
not the prohibited act has been committed, has laid down certain rules
to be followed. Chief among these is that the state has the burden of
proving its allegations and that such proof must be made in accordance
with the rules of evidence. It is the duty of the prosecutor to make this
proof and the function of the defense counsel, as regards this particular
phase of the trial, to see that the rules of evidence are complied with.
Thus the defense counsel fulfills his role as an officer of the court by
seeing that the proof of the prosecution is made accordingly. It is not
within his province to assume the role of the prosecutor and come forth
with affirmative evidence of the commission of the overt acts alleged.
There is a school of thought which holds that an attorney should
decline to undertake the defense of one whom he knows to be guilty.
It would appear that any attorney espousing such a view is in a position
which contradicts itself. Witness the following statement:
“It is only when a lawyer really believes his client is innocent
that he should undertake to defend him. All our democratic
safeguards are thrown about a person accused of a crime so that
no innocent men may suffer. Guilty defendants, though they
are entitled to be defended sincerely and hopefully, should not be
entitled to the presentation of false testimony and insecure state-
ments by counsel.”5
The contradiction is readily apparent. If an attorney should defend
only those whom he believes to be innocent, how then are the “guilty”
defendants to obtain counsel, the right to which is admitted. Further,
is not the attorney usurping the function of the judge and jury by pre-
judging the guilt or innocence of the client?
II. LEGAL POSITION
From a legal viewpoint there appears to be little doubt that an at-
torney may defend one whom he knows to be guilty of the offense
charged. In fact, it may be even said that in certain circumstances
there is a duty to defend one accused of crime, regardless of the at-
torney’s personal opinion of guilt. Both the Federal’ and numerous
41MATT. 5. 28.
5 Cutler, Is a Lawyer Bound to Support an Unjust Cause? A problen of
Ethics, 38 A.B.A.J. 300, at 301 ( ).
6 U.S. CONSTITUTION, Art. 6.
[Vol. 42
state constitutions7 give one accused of crime the right to the assistance
of counsel. Perhaps the basic principle of such constitutional provisions
may be summed up as follows:
“Every man, accused of an offense, has a constitutional right
to a trial according to law; even if guilty, he ought not to be con-
victed and undergo punishment unless upon legal evidence; and
with all the forms which have been devised for the security of
life and liberty.”s
Without the assistance of counsel, many, if not all, of the rights
guaranteed to an accused would be mere paper rights, lacking substance
and meaning.
The right to assistance of counsel is itself a substantial right,9 the
denial of which is grounds for reversal of a conviction. Nor can it be
said that the right to counsel is only the right of an innocent man; there
would appear to be little doubt that even a guilty defendant is entitled
to a fair trial. 10 This being so, it is the duty of the defense counsel to
assure that the accused is given a fair trial,” be he guilty or innocent in
the eyes of the attorney or the public. 12 There is no duty upon the
defense counsel to aid the prosecution in its case, for the accused has
the right to have his guilt, if any, determined by the court and jury.’3
The state having the burden of proof, 4 the defense is under no
duty to come forth with incriminating evidence. The prosecution, how-
ever, has a double duty; the District Attorney must not only attempt to
make the case for the State, but he must also come forth with any facts
tending to show the innocence of the accused.15 This is just one ex-
ample of the numerous safeguards set up to protect the innocent. How-
ever, such safeguards are available to the guilty as well. For it must
be remembered that guilt is a legal concept, and not a subjective de-
termination made by a lawyer or the public at large, and until an
accused is found guilty by a court, he is entitled to all the safeguards
and protections afforded by law.
Thus, a lawyer in undertaking the defense of a “guilty” accused
is merely acting in accordance with his oath as an attorney to uphold
the constitution and laws of the land. For to deny any man the
assistance of counsel is to strip him of his rights and privileges as a
citizen. It is the unique role of an attorney as defense counsel to be
7WIS. CONSTITUTION, Art. I, sec. 7; CONSTITUTION OF MICHIGAN
of 1908, Art. II, sec. 19; ILLINOIS CONSTITUTION, Art. II, sec. 8.
8 See note 3 supra.
9 State ex rel. Traister v. M1ahoney, 196 Wis. 113, 219 N.W. 380 (1928).
10 Fischer v. State, 226 Wis. 390, 276 N.W. 640 (1937).
11 State v. Barto, 202 Wis. 329, 232 N.W. 553 (1930).
12 State ex re. Drankovich v. Murphy, 248 Wis. 433, 22 N.W.2d 540 (1946).
‘I3 Lonergan v. State, 111 Wis. 453, 87 N.W. 455 (1901) ; ‘Melli v. State, 220 Wis.
419, 265 N.V. 79 (1936); Parke v. State, 204 Wis. 443, 235 N.W. 775 (1931).
” Fraccaro v. State, 189 Wis. 428, 207 N.W. 687 (1926).
’15 O’Neil v. State, 189 Wis. 259, 207 N.W. 280 (1926).
19581 NOTES
MARQUETTE LAW REVIEW
engaged not only in the defense of the rights of his individual client,
but in the defense of the rights of each and every citizen of the land.
If the courts can deprive even the most despised accused of his rights
as a citizen then may it also deprive the bulk of the citizenry of the
rights afforded them under the constitution. For such rights are worth.-
less unless the courts will enforce them and the lawyers protect them.
IV. CONCLUSION
There is little question, if any, as to the right of an accused to a
fair trial and assistance of counsel. The difficulty arises in the moral
issues involved in the defense of one who has admitted his guilt. How-
ever personally repugnant the particular case may be to the individual
attorney, it must always be remembered that even the most wayward
of citizens have rights which must be protected. Chief among which
are the right to a fair trial and “due process” of law. The protection
of such rights is a moral act the accomplishment of which is an art
peculiar to attorneys. It is not only the attorney’s singular ability to
protect such rights but also his duty as a member of a profession dedi-
cated to justice. The attorney need feel no reluctance, on moral
grounds, to undertake the defense of an accused; rather, he should
undertake such a task in a spirit of service to his profession, his fellow
citizens and his country.
JAMES T. BAYORGEON
Wisconsin’s Anti-Bushing Law 218.01 (3) (a) 18 – The present
capacity of our nation’s automobile manufacturers to produce cars far
exceeds the American public’s ability to consume them.’ This excess,
coupled with the great number of dealers handling the same product
in the same market area, has forced dealers into various unethical prac-
tices. Bushing2 is but one of many such practices. However, it is also
one of the most successful.
‘On March 1, 1958 dealers had in stock a sixty-eight day supply of cars. This
high inventory (thirty days is normal) had increased from February 1, 1958
despite factories working three or four day weeks instead of the usual five
day week. Automotive News, March 1st, 1958, page 1.
2 The “bush” as it is called is set up by another practice known as highballing.
The highball was developed to get a buyer who is shopping to return to the
bushing dealership before he purchases an automobile. The following is an
example of how a highball followed by a bush enables a dealer to sell an
automobile.
Mr. Smith is looking for a new car. He has decided to buy a certain make
and model and knows the equipment he wants. Mr. Smith begins to shop
around for the best price he can get. He wants to see how little a cash differ-
ence he can pay and still get the car of his choice. Mr. Smith first stops at the
X Auto Company and receives a figure of $2400.00 cash difference from a sales-
man there. From the X Auto Company, Mr. Smith proceeds to the Y Auto
Company and by letting the figure of $2400.00 cash difference slip out, gets the
salesman at the Y Auto Company to agree to a cash difference of $2350.00. By
repeating this process at several more dealers, Mr. Smith manages to reduce
the cash difference to $2100.00 at the B Auto Company.
[Vol. 42
Marquette Law Review
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assignment 3
Context
In this week’s discussion you assume the role ofCEO of a company. In anticipation of the upcoming quarterly disclosure of profits, you prepare your Board of Directors for the pressure that cost-push inflation is having on profits. There will be some erosion of profits.
Instructions
For this discussion, assume the role of CEO of one of the followinghypothetical companies:
All America Grocery Inc. We serve communities in the middle of the income market, providing low prices for all basic grocery needs.Our modest-income consumers expect good deals on good quality foods.The Covid-19 pandemic has put upward pressure on the price of everything we sell. Cost-push inflation from multiple sources is impacting our operating cost and our cost of goods. We are both fortunate and unfortunate that the price elasticity of demand for food is .20.
Very Big US Auto. Very Big US Auto is one of the oldest and largest manufacturers of autos in the United States. Very Big US Auto has an international supply chain and is highly dependent on components manufactured abroad and assembled in the United States.Costs are rising on all aspects of production across the industry. Very Big US Auto is seeing inflationary pressure in everything we use: labor, materials, components, and computer chips.On the demand side, Very Big US Auto knows thatdemand is relatively elastic with a priceelasticity of demand of 1.2. But we also know that the pandemic has made some transportation substitutes less acceptable.
Big Time Entertainment. Big Time Entertainment is a nationwide firm providing movies, concerts, arcades, and other in-person entertainment venues such as bowling and roller skating. Our operations have been heavily impacted during the Covid-19 pandemic, including continuing limits on number of guests and new costs associated with safety measures for both staff and customers.We are now reopening but facing a continued cost-push inflation.We also face uncertainty as to the potential for additional shutdowns. Customers are fearful, and the guidance on operating our facilities means we are operating far below our optimal number of patrons to cover the higher cost of everything. Price elasticity of demand is 1.6, and we are also faced with competition from online entertainment and gaming, which are not experiencing many of these cost pressures.
In your discussion post, address the following prompts within the context of your chosen hypothetical company of which you are the CEO:
Is the demand curve for your product relatively elastic, inelastic, or unitary elastic? Demonstrate this for your company’s product by how much the quantity demanded will change if you pass on the 10% increase in cost. In other words, prepare a forecast showing by what percentage the quantity demanded will change if your prices are raised by 10%. You must provide calculations showing the percentage change in quantity demanded.
Will you pass on most or all of the cost increase to your customers?Why or why not?