Reviewing John Coffee’s book “Entrepreneurial Legislation”  Judge Jed Rakoff suggests a possible solution to the government’s failure to prosecute in cases of bankers who have clearly violated the law.

Rakoff writes: Coffee, while also strongly advocating for more governmental action against individuals, proposes an interesting innovation that he thinks would make class actions more socially useful and less liable to abuse. Overall, he suggests making good on class action’s promise of a “third way” by combining its profit-seeking tendencies with oversight of the class actions themselves by public agencies. Specifically, he proposes, among other reforms, that government regulators in matters where class actions are common should employ private class action lawyers, on a contingent fee basis, to bring class actions supervised by the regulatory authority but for the benefit of the victims, to whom any recovery would be distributed.

It is hard to believe that the settlements in such cases have much of a deterrent effect on the individual executives who actually committed the alleged misconduct. This is why class actions may be no real substitute for criminal and regulatory prosecution of the individuals actually responsible for corporate misconduct.

Is it possible that enlightened regulators could vindicate the rights of individuals without the massive profit-seeking machinery of the current U.S. legal system, and without the cruel bias toward incarceration of the current U.S. criminal justice system?