the top 5 ethical issues facing in house counsel*€¦ · · 2013-09-04©2013 foley & lardner...

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©2013 Foley & Lardner LLP • Attorney Advertising • Prior results do not guarantee a similar outcome • Models used are not clients but may be representative of clients • 321 N. Clark Street, Suite 2800, Chicago, IL 60654 • 312.832.4500

*(And What To Do About Them!)

The Top 5 Ethical Issues FacingThe Top 5 Ethical Issues FacingThe Top 5 Ethical Issues FacingThe Top 5 Ethical Issues Facing

In House Counsel* In House Counsel* In House Counsel* In House Counsel*

©2013 Foley & Lardner LLP

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*(And What To Do About Them!)September 5, 2013

Presented by:

Nancy L. Stagg

Partner

Foley & Lardner LLP

San Diego, CA

[email protected]

Direct: 619 685 6454


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Presented by:

Michael P. McCloskey

Partner

Foley & Lardner LLP

San Diego, CA

[email protected]

Direct: 619 685 6409


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Presented by:

Phillip H. Rudolph

EVP, General Counsel & Corporate Secretary

Jack in the Box Inc.

San Diego, CA

[email protected]


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In House CounselIn House CounselIn House CounselIn House Counsel

n Goal for Today:– Identify the most frequently encountered ethical issues

faced by in house counsel

– Identify the best practices for addressing ethical issues


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The Top 5 Ethical Issues Facing The Top 5 Ethical Issues Facing The Top 5 Ethical Issues Facing The Top 5 Ethical Issues Facing


What are the “Top 5” Ethical Issues?1. Who’s Your Client?

2. E-Discovery

3. Hiring Conflicts of Interest

4. Outsourcing (Avoiding Unauthorized Practice of Law)

5. Attorney Client Privilege and Attorney Work Product


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n Governing law and helpful guidance:– State Bar Rules of Professional Conduct

– ABA Model Rules of Professional Conduct

– Court opinions

– Ethics opinions of bar associations/committees

http://www.sdcba.org/index.cfm?pg=LegalEthicsOpinionsIndex

http://njlaw.rutgers.edu/collections/ethics/

http://www.nysba.org/AM/Template.cfm?Section=Ethics_Opinions&Template=/


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1. Who’s Your Client?

n Officers/Directors

n Employees

n Subsidiaries/Affiliates


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n Who’s Your Client?– Formation of attorney-client relationship is NOT dependent

upon a written agreement

– Give “Miranda” warnings (“I represent the company and

may have to report what you tell me”)

– Recognize situations where separate counsel may be

needed

– Encourage employees to retain separate counsel

– Avoid giving advice on personal matters


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n Who’s Your Client?

– Do you have a duty to make reasonable efforts to

correct an employee’s misunderstanding of your

role?

n Yes! You must explain who you represent and must not

lead the employee into believing that he or she may

confide in you in a way that will not be used in the

company’s interest. (Cal. Rule Prof. Conduct 3-600 (D))


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– Subsidiaries/ Affiliates/ Joint Ventures/ LLCs

n Generally no conflict where parent and 100% sub are

both solvent and their interests are aligned

– But conflicts can occur:

n In transactions between companies

n When one becomes insolvent

n Where ownership varies or is partial


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– What are the consequences of an ethical conflict?

n Violation of state bar rules, which could lead to attorney

discipline

n Disqualification of representation (which may also be

imputed to outside counsel)

n Subject matter waiver of attorney-client privilege


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2. E-Discoveryn ABA Model Rules apply to the legal department of a

corporation (ABA Model Rule 1.0)

n ABA Model Rule 1.1 requires that a “lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.”

n Competent representation means issuing timely litigation holds


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2. E-Discoveryn But it’s not enough to just issue the hold

notice: – In house counsel are charged with taking affirmative steps to

monitor compliance with litigation holds so that all sources of discovery information are identified and searched or preserved.

– Also includes reading the Federal Rules of Civil Procedure to ascertain what counsel’s and his or her client’s obligations are with regard to ESI.

n Swofford v. Eslinger, 671 F.Supp2d 1274 (M.D. Fla. 2009)


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2. E-DiscoverySanctions aren’t the only concern:

– ABA Model Rule 1.6 prohibits an attorney from revealing information related to the representation of a client unless theclient gives informed consent

– Gives rise to a duty to safeguard client information from inadvertent disclosure, including privileged communications

– Employ these best practices:

n Associate competent outside counsel to advise on ESI issues

n Use Federal Rule of Evidence 502 to protect privileged info frominadvertent disclosure or when disclosure to gov’t is required

n (And take your IT personnel to lunch!)


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3.Hiring Conflicts of Interest

Ethics rules don’t prevent the corporation

from hiring an attorney who has been adverse

to the corporation in litigation

- The Rule of Professional Conduct apply to

lawyers, not corporations

- But….


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3. Hiring Conflicts of Interest

– In most jurisdictions, a corporate law dept. is a

“law firm” subject to same conflicts rules as

outside legal counsel

– Requires that the law department follow the same

conflict screening when hiring in house counsel

– The new lawyer cannot accept employment

adverse to the prior client -- unless the former

client provides informed written consent


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3. Hiring Conflicts of Interest– Conduct a thorough review of the new hire’s conflict

screening memo for possible conflicts

– Don’t assume recent relaxing of vicarious disqualification rules in some jurisdictions will suffice

n If challenged, you need to show ethical walls are in place to protect the attorney’s former clients

Kirk v. First American Title Ins. Co., 183 Cal.App.4th 776 (2010)

Adams v. Aerojet-General Corp., 86 CalApp.4th 1324 (2001)


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4. Outsourcing (avoiding the unauthorized practice of law)- Document review and management

- Tax work

- Legal research

- Patent applications (in foreign jurisdictions)

ABA Formal Opinion 08-451 (2008):The decision to outsource legal services does not abrogate the lawyer’s responsibilities under Model Rule 1.1

ABA Model Rules 5.1 and 5.3 also require the lawyer to make reasonable efforts to ensure the work performed is consistent with his or her professional obligations


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4. Outsourcing (avoiding the unauthorized practice of law)Best Practices:Conduct proper due diligence:

Review the education & background of contract lawyers

Review the security of the facility

How will that jurisdiction treat privileged information?

Obtain “client” consent

Document your supervisory activities


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5. Attorney Client Privilege and Attorney Work

Product

- Court often presume that in-house

counsel’s communications are more

“business” than “legal”

- Heightened scrutiny of privilege claims

when no outside counsel are involved


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Product

Mark confidential communications

But labeling alone won’t protect

Convey that your communications have a legal

purpose

Consider involving outside counsel


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Product

Special Issues:

M&A transactions – post-closing issues?

Foreign jurisdictions – privilege not always

available to in-house counsel


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Bonus Round!

In addition to these 5 issues, are there other

recurring ethical issues corporate counsel

face regularly?


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Questions?

Nancy L. Stagg

[email protected]

Direct: 619 685 6454

Michael P. McCloskey

[email protected]

Direct: 619 685 6409

the top 5 ethical issues facing in house counsel*€¦ · · 2013-09-04©2013 foley & lardner...

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