Law as Symbol : Appearances in the Regulation of Investment Advisers and Attorneys

From a macrosociological perspective, law is an institution of society, is shaped by conditions in society, and facilitates social life by inter alia producing symbols. Law accordingly adopts concepts and principles that focus on the appearance to society of certain phenomena and that are symbols when the phenomena are socially significant. To illustrate symbols in law, the article examines (i) the quot;hold oneself outquot; standard in defining an investment adviser under the federal Investment Advisers Act and (ii) the standard for ethical conduct that requires attorneys to avoid appearances of impropriety. If symbolic concepts and principles are tied to the properties of society, the acceptance of the appearance-of-impropriety standard by a state will be related to one or more system-level properties. In an analysis of data with logistic regression, differences between states in whether the standard was in use as of 2005 were found to be associated with differences between states in the levels in 1980 of two such properties: cultural heterogeneity, which was measured by the percentage of state inhabitants who had been born outside the United States; and social system rationality, which was measured by the percentage of adults in the state who were enrolled in college. Specifically, the odds that a state was using the standard were appreciably raised by each increase in level of cultural heterogeneity and were lowered by each increase in level of social system rationality. Because the appearance-of-impropriety standard for attorneys is symbolic, the two properties affected whether symbolism developed in law. The findings also suggest that information on societal properties and the forces behind them can be used to predict, albeit imperfectly, the symbolic concepts and principles of law that will exist at future points in time