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Innovation comes to all things, even to classic concepts that have grounded entire professions for years or decades.
Among attorneys and compliance professionals, the classic Fraud Triangle—with its three points of pressure, opportunity, and rationalization—stands as a foundational concept to describe the characteristics present after fraud has occurred.
However, the classic Fraud Triangle yields limited utility—and indeed does not really even apply—in forward-looking situations where the third leg of rationalization is necessarily absent.[1] Such situations include ones adversarial in nature such as complex commercial disputes, investigations, and compliance matters where no admission comes from the opposing side, investigation subjects, or counterparties in compliance due diligence and risk assessments. Indeed, in such situations instead of rationalization, one faces vehement denials. This leaves legal and compliance professionals seeking to pierce through darkness in need of a more suitable and effective guiding light.
