A legal fiction is an assumption that courts use to reach a desired result despite the fact that there is absolutely no basis in reality to assume such a fact; indeed, in some cases, the legal fiction is absurd in the extreme. For example, the United States Supreme Court (SCOTUS) recently declared that a corporation is a person and money is speech in the context of political contributions. Although the idea of corporate personhood is not novel, its application in this context is unprecedented. The reason the Supreme Court chose such an assumption in its hated Citizen's United decision was to provide that “person” with First Amendment protections afforded real people with respect to free speech.
The absurdity of such a result was recently demonstrated by Stephen Colbert's Super PAC, deftly named the “Making a Better Tomorrow, Tomorrow” PAC (which is definitely not coordinating with John Stewart). Colbert's PAC ran an ad in South Carolina likening Mitt Romney's Company, Bain Capital, to a serial killer because it bought other hapless companies, bankrupted them and sold the scraps, effectively destroying those companies. Thus, in the act of destroying so many “people”, Bain Capital made of itself a serial killer. Hilarious.
It doesn't take much to reach similarly ridiculous results concerning the corporate person. For example, can a corporation vote? Should it be allowed to date? And what if a corporation commits a crime, should it be jailed, fined, placed on probation or all of the above? The silliness can go on forever.
Interestingly, long before Citizen's United a documentary titled “The Corporation” asked the question, “If a corporation was a person, what kind of person would it be?” The answer, not surprisingly, was that the corporation would resemble a psychopath as that is defined in the DSM-IV. The conclusion was reached because, according to the filmmaker, the operational principles of the corporation give it a highly anti-social "personality": it is self-interested, inherently amoral, callous and deceitful; it breaches social and legal standards to get its way; it does not suffer from guilt, yet it can mimic the human qualities of empathy, caring and altruism.
So, what happens to a democracy when corporations are given personhood and the ability to exert their corrupting influence at will and without regard to anything but its own psychopathic self-interest? When real people without money assemble to express their dissatisfaction with the political consequences of this, they're treated as a public nuisance and are clubbed, pepper-sprayed, thrown out of public parks and evicted from public spaces by corporate goons. In other words, freedom and justice are extinguished.
And all is facilitated, indeed is made possible where it would otherwise be impossible, with the misuse of legal fictions in the law.