Texas Wesleyan Law Review


Daniel T. Ostas

Document Type



This Article examines ethical issues posed by imperfections in legal texts. More particularly, it addresses "legal loopholes," carefully defining the term and then exploring whether there is anything wrong with exploiting loopholes for private gain. Focusing on corporate settings, the analysis considers both the obligation of a business leader to support reasonably just social institutions and the professional obligation of corporate counsel advising on such issues. Although the notion of a legal loophole enjoys widespread colloquial use, the term is typically used quite loosely and without critical reflection. Perhaps in an adversarial system, one becomes accustomed to taking full advantage of any and all effective legal recourse, including but not limited to the exploitation of loopholes. Loopholes often generate arguments over interpretation. This Article addresses the ethics of legal interpretation head on. It examines the scope of the social obligation to abide by a good faith interpretation of a legal text, rather than to exploit inevitable imperfections in those texts to advance private interests. The analysis proceeds in three parts followed by a conclusion. Part II portrays a loophole as a style of argument that pits a literal inter- pretation of a text against a more purposeful one. Because literal interpretations sometimes prevail, loopholes have economic value. Part III examines the ethics of a corporate legal strategy to construct strained interpretations of the law as guides to corporate conduct. The discussion embraces both the libertarian insights of Milton Friedman and the democratic liberalism of John Rawls, drawing useful ideas from each. Part IV considers the role of corporate counsel, concluding that in an adversarial setting, corporate counsel must argue for the legal interpretation that best suits the corporation's needs. In a transactional setting, by contrast, where advising rather than advocacy is the norm, ethics require a more balanced interpretation. The Article concludes with a brief summary.



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