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Реферат: InHouse Counsel Essay Research Paper INHOUSE COUNSELWhen

Название: InHouse Counsel Essay Research Paper INHOUSE COUNSELWhen
Раздел: Топики по английскому языку
Тип: реферат Добавлен 06:46:06 14 ноября 2010 Похожие работы
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In-House Counsel Essay, Research Paper

IN-HOUSE COUNSEL

When a company’s interest are the same as those of an individual employee, in-house lawyers generally can avoid multiple-representation problems. But once there is a conflict of interest — or a perception of a conflict — the picture changes dramatically. It is important for in-house counsel to know how to spot such conflicts and what steps to take in response. Corporate counsel clients normally include the company, its board of directors, its most senior management, the heads of the company’s various business divisions, its employees and even its former employees. All of these clients deserve quality representation in every matter, from the most fundamental to the most vexing.

With this broad range of clients, ethical questions can arise. Specifically, can corporate counsel serve more that one client and, if so, what constraints exist upon such multiple representation? In most instances, a corporate lawyer should attempt to represent both the corporation and its employees, consistent with his or her ethical obligations. It is obviously in any company’s interest to present a consistent and unified version of events that give rise to potential liability. Under governing ethics rules, corporate counsel has one client — the corporation. Whenever conflicting loyalties arise, that relationship is paramount and requires the lawyer to cast aside any other clients. This bright-line test is muted in actual practice, however, and can put in-house lawyers into some uncomfortable situations, For example, they may have to explain to members of senior management that because the managers’ interest are sufficiently different from the company’s the managers need separate legal advice.

Just as the importance of corporate law departments has increased, so too have the problems for corporate attorneys. Corporate employees seem ever more aware of their rights as opposed to the company’s interests, and corporate counsel must be sensitive to these potentially conflicting interests. Although predicting the future always is difficult, one thing is certain: There will be more confusion and difficulty, not less, in the area of multiple representation. And for that reason the lawyer should evaluate whether there is a conflict or a potential conflict in representing someone in addition to representing the company. Several factors should be considered during this evaluation: the nature of the matter, whether it is a criminal or civil matter, whether it involves litigation or a regulatory investigation; the individual’s role in the matter, whether the person is a target of an investigation, a key witness or a custodial of records; and the individual’s status, whether he or she is a senior officer or director, a temporary employee or and ex-employee. Also lawyers need to ensure that individuals involved in the matter understand the role of corporate counsel, understand multiple representation and consent to that representation.

Counsel should take the following steps in order to provide himself with an ethical shield while allowing for productive fact-gathering:

Tell the employee the reason for the meeting.

Explain that, as the corporate attorney, he or she is representing the company.

Explain that he or she may also represent the employee in the matter if the employee consents and if there is no conflict.

Explain that the employee always has the right to his or her own counsel.

Explain the details of the attorney-client privilege — that the privilege belongs to the company, and the company and subsequently waive it.

Dictate and file a memo memorializing the conversation.

At some point, it would be prudent for counsel to revisit the issue of joint representation. This may be appropriate when the investigation becomes more formal — upon the arrival of a grand jury subpoena, for instance, or if there is a suit filed with the company and an employee is named as a defendant. If an employee clearly is or is likely to be, the target of a grand jury investigation, the employee promptly should retain separate counsel. The employee also should retain separate counsel if he or she wants to chart a substantively different course than the company or other employees. But the fact that a matter becomes more formal does not signal that anything is wrong with the multiple representation.

There are times when a company’s general counsel, at the outset, will want to have outside lawyers represent the company and its employees. This may be necessary, for instance, when the in-house lawyer has been directly involved in the matter at issue, and he or she is likely to be called as a witness. When the in-house lawyer is a target of an investigation or a potential defendant, the lawyer will be in need of his or her own counsel. And the lawyer may not choose not to represent the company and an employee simultaneously when that representation could prevent the lawyer from representing the company in future actions against the employee. There could be some benefit to the company’s counsel not representing employees in high-stakes regulatory matters. It seems that regulators, regardless of lawyers’ conflict rules, will go more easily on organization that definitively and publicly separate their destinies from those of their employees.

Undoubtedly questions will arise as to how these issues play out for corporate counsel in practice. Two scenarios taken from a recent issue of The National Law Journal are described, along with suggestions as to how they might be addressed.

One scenario involves an in-house counsel for a retail brokerage firm who learned that an arbitration claim had been filed by a customer against the firm and one of its account executives. The claim was based on allegations of churning and unauthorized trades. The claimant sought $250,000 in damages, plus punitive damages. A financial analysis of the account, however, showed an actual net loss to the customer of $25,000. The firm’s attorney concluded, moreover, that the allegations were weak. At the outset, the in-house attorney can represent both clients in this matter; and, as indicated previously, the attorney initially should make the appropriate disclosures to the clients. As the case comes close to arbitration or settlement, however, there may be a conflict of interests. The firm, for example may want to resolve the case by settling at or around the amount of the customer’s net loss, reasoning that the company’s potential exposure is not worth the risk of litigation. The broker, on the other hand, may resist settling, giver that settlement at that amount would cause the case to be listed as part of his permanent regulatory record. In this type of conflict, the firm’s attorney needs to pay close attention to these potentially conflicting interest.

Another scenario, an in-house attorney for a high-tech company “Company A,” received a letter from a competing company, “Company B,” threatening a lawsuit. The letter stated that one of company B’s ex-employees had just bee “stolen away” by company A and that company B had good reasons to believe that the former employee had taken several items with her to Company A, items to which company B claimed a proprietary legal right. The letter also stated that one of the items in question related to a top-secret project that Company B was doing for the government and that, besides contemplating litigation, Company B had informed the local U.S. attorney’s office of the likely theft.

In the first interview Company A’s counsel had with the newly hired employee — after the appropriate disclosures — the employee stated that she had done nothing wrong and that she did not take any documents or materials from company B. She also stated that what Company B was really taking about was her knowledge of the various technological processes and systems at the company — knowledge that she could not simply erase from her mind. In addition, she stated that although she would be working on similar types of matters at Company A, there was no real likelihood of an infringement of Company B’s legal rights.

This scenario calls for separate counsel for the new employee, and promptly. Intellectual property is an especially tricky area, particularly when well-placed employees jump between competitors. In this situation, moreover, it is not a battle to which Company A wants to be a party. Company A should separate itself from its new employee as much as possible until she can clear herself. Given the possible criminal implications of this matter, it is possible that the new employee might invoke the Fifth Amendment at some point in the U.S. attorney’s probe. If she does, Company A would be well-served to consider terminating her employment. The right to counsel and the right of protection from self-incrimination are constitutional rights; employment is not. Company A could suffer damage to its reputation for protecting her if she refuses to candidly tell the truth.

The Corporate Counsel Committee of the American Bar Association’s Young Lawyers Division recently solicited written responses from attorneys on the ethical concerns on in-house counsel. They were asked their advice for an attorney confronted with an ethical dilemma? Their response were: in-house counsel should contact the general counsel first; an attorney must be particularly sensitive to potential disputes and must make every effort to avoid being placed in a compromising position; identifying the true client is essential; do not avoid confronting the issue, ethical dilemmas, unlike business issues, rarely fade away, they tend to fester; ethical dilemmas are best resolved by avoiding them from the beginning, the best way to do the is to engage the participants in a discussion of the potential problems and pitfalls;

Finally, we may well expect the use of inside counsel to increase because of the rising legal fees charged by outside corporate counsel. Many corporations, in an effort to cut costs, push for settlements, try to use arbitrators, and expand their inside corporate legal staff. Whatever the reasons, the number of inside counsel is large and growing. Do we ask too much of inside counsel? Should the Code of Professional Responsibility draw distinctions between the independence of judgment expected of outside counsel and the independence of judgment expected of inside counsel? In-house counsel should be required particularly in close cases to inform outside counsel who is subject to different pressures, and then rely on the latter’s advice.

IN-HOUSE COUNSEL

BY

DONICE MARIE REISS

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