One challenge for in-house lawyers is finding practical advice around legal and ethical issues. Many of the ethics issues they face are broader than what a specific section of the rules of professional responsibility does or does not mandate. Today we take on the challenge and discuss some of the basic legal and ethical issues faced by in-house counsel and what to keep in mind as you analyze the situation.
If you read through the ABA Model Rules of Professional Conduct — or your applicable state rules — you notice that most of the rules are written for lawyers in private practice. Rules specifically addressing in-house counsel are a small fraction, but in-house counsel must comply with all of the rules nonetheless. There are several reasons for this disparity: there are no fee disputes for in-house lawyers, no client trust account issues, no advertising issues, and the in-house lawyer is an employee of the client. Moreover, the in-house lawyer’s deep involvement in the day-to-day business can lead to a higher level of accountability in ways not affecting lawyers in private practice. Understanding that things are different in-house gives you a lens to consider any legal and ethical issues that pass your way.
For in-house counsel, the client is the organization and not any individual member of management or employee. This can be difficult to remember at times because your business colleagues often think of you as “their lawyer.” That is okay at times — to the extent the employee is an extension of the company — but it must be clear between you and the business client that you represent the interests of the company and not them individually. You must recognize the situations where separate counsel may be needed and whether to advise your business colleague to get their own lawyer. This occurs most often in the context of internal investigations. Under such circumstances, it’s important that you give your business colleague what is known as an “Upjohn” warning. Make it clear to the employee that you are interviewing, including senior management, that you represent the company and not them — and they have the right to obtain their own counsel.
When companies run afoul of securities laws or criminal laws, you will often see someone ask, “Where were the lawyers?” Unfortunately, this means that in-house counsel is under the microscope and regulators are expecting you to act as “gatekeepers” to prevent fraud and bad acts by the company.
The bottom line is that you cannot assist in a crime or fraud and you must act to take steps to prevent bodily harm. Furthermore, if you work for a publicly-traded company, you may have obligations under Sarbanes-Oxley §307 to report material violations of the law “up the ladder.”
Know whom to go to if this happens — including trusted outside counsel. Likewise, under the Dodd-Frank and SEC “whistleblower” rules, the company may not engage in any retaliation against a whistleblower. In-house legal departments should have guidelines and training in place on what to do if an in-house lawyer suspects that a crime has been or will be committed by the company.
Depending on the circumstances, consider documenting any actions taken by you or the department to comply with your obligations, or expectations, as this may be useful in the event there is some reason outsiders question your actions.
As a lawyer, you have an obligation to maintain competence regarding developments in the law that are important to your client. For in-house generalists, this is a broad mandate. Focus on learning skills that the company needs — both in the near term and as you look out five years into the future.
Build around the following advancements:
While it is important to be familiar with the specifics of the applicable code of professional responsibility, the following checklist will probably solve 80% of the day-to-day legal and ethical issues faced by in-house counsel:
For in-house counsel, a bit of diligence and common sense is your best friend when it comes to legal and ethical issues. With access to Practical Law, you have a wide array of resources available to keep you current and up to speed with the click of a mouse.
Sterling Miller, HILGERS GRABEN PLLC
Sterling Miller is a three-time General Counsel who spent almost 25 years in house. He has published five books and writes the award-winning legal blog, Ten Things You Need to Know as In-House Counsel. Sterling is a regular contributor to Thomson Reuters as well as a sought-after speaker. He regularly consults with legal departments and coaches in-house lawyers. Sterling received his J.D. from Washington University in St. Louis.