#16489 - Lawyers For Companies And Other Organisations - Professional Responsibility

07. Lawyers for Companies and Other Organisations

P. 429-459

• In-house lawyers is employed by the company client, management decide her title, income…etc. threat to professional independence

• Lawyers retained by large companies who produce most of their income also threat to independence

• Employed lawyer filed/ demoted because of her refusal to act unethically/ insistence that co. act lawfully may have claim for retaliatory discharge Crews v Buckman Labs

  • But not all jurisdiction allowed, Illinois rejected for lawyers Balla v Gambro

• ABA Rule 1.13

  • (a) A lawyer employed or retained by an organization represents the organization acting through its duly authorized constituents.

  • (b) If a lawyer for an organization knows that an officer, employee or other person associated with the organization is engaged in action, intends to act or refuses to act in a matter related to the representation that is

    • a violation of a legal obligation to the organization, or

    • a violation of law that reasonably might be imputed to the organization, and that

    • is likely to result in substantial injury to the organization,

    • then the lawyer shall proceed as is reasonably necessary in the best interest of the organization.

    • Unless the lawyer reasonably believes that it is not necessary in the best interest of the organization to do so, the lawyer shall refer the matter to higher authority in the organization, including, if warranted by the circumstances to the highest authority that can act on behalf of the organization as determined by applicable law.

  • (c) Except as provided in paragraph (d), if

    • (1) despite the lawyer's efforts in accordance with paragraph (b) the highest authority that can act on behalf of the organization insists upon or fails to address in a timely and appropriate manner an action, or a refusal to act, that is clearly a violation of law, and

    • (2) the lawyer reasonably believes that the violation is reasonably certain to result in substantial injury to the organization, then the lawyer may reveal information relating to the representation whether or not Rule 1.6 permits such disclosure, but only if and to the extent the lawyer reasonably believes necessary to prevent substantial injury to the organization.

  • (f) In dealing with an organization’s directors, officers, employees, members, shareholders or other constituents, a lawyer shall explain the identity of the client when the lawyer knows or reasonably should know that the organization’s interests are adverse to those of the constituents with whom the lawyer is dealing.

• Rule 4.3 Dealing With Unrepresented Person

  • In dealing on behalf of a client with a person who is not represented by counsel, a lawyer shall not state or imply that the lawyer is disinterested.

  • When the lawyer knows or reasonably should know that the unrepresented person misunderstands the lawyer’s role in the matter, the lawyer shall make reasonable efforts to correct the misunderstanding.

  • The lawyer shall not give legal advice to an unrepresented person, other than the advice to secure counsel, if the lawyer knows or reasonably should know that the interests of such a person are or have a reasonable possibility of being in conflict with the interests of the client.

• “Should We Forbid Secret Settlements That Conceal Danger?” (433)

Proposed Amendment to Rule 3.2(B): Do You Support It? Which version?

• A lawyer shall not participate in offering or making an agreement,

• whether in connection with a lawsuit or otherwise,

• to prevent or restrict the availability to the public of information that [the lawyer reasonably believes] [a reasonable lawyer would believe] directly concerns a substantial danger to the public health or safety, or to the health or safety of any particular individual(s).

Conflicts and Confidentiality in Entity Representation

1. Internal Investigation

• Advantages of hiring lawyer to conduct internal investigations:

  • Public relations, stay ahead of/ keep up with whatever prosecutors are finding, keep lawyer’s work secret as it is privilege

• Lawyers are positioned to stop corporate frauds and crimes at their inception – Lawyers will either know about companies’ misbehavior or be on notice

• “Please Just Find Out What Happened?” (434)

  • What should the lawyer say if the witness asks: (i) “Do I need a Lawyer?” (ii) “Will you represent me, too?” (iii) “Will the company pay my lawyer?”

    • Maybe, as far as there is no conflict. But not representing now

    • Maybe, “you may find a private lawyer to seek separate advice

    • But would then worry that the witness would not talk now

    • Co. may have policy that mandate employees to cooperate

    • If lawyer represent both + conflict between lawyer would need to withdraw

• Elements of a Good “Upjohn” Warning

  • We represent the Company only.

    • We do not represent you. We are not your lawyers. You are not our client

  • Anything you tell us may be shared with the Company.

    • The Company controls the attorney-client privilege and our duty of confidentiality for your communications with us

    • The Company can waive any privilege or confidentiality protections for your communications with us

  • Do you understand what I have said? Do you have any questions?

  • Read from a script so you can say you did.

  • It becomes a business record under the business record exception to the hearsay rule.

  • After you are finished, date and sign the script.

  • File it in a safe place.

  • Have a witness in the room

• In re Grand Jury Subpoena (436)

  • Lawyers conduct internal investigation at AOL, gave Upjohn warnings to officers being interviewed. Interviews were privileged – but does AOL or officers owe the privilege?

  • Officers: joint representation with AOL + common interest arrangement occurs when each of 2 or more lawyers/ firms separately represents a client on matter of common interest between the 2 clients

  • Held: attorney-client relationship between investigating lawyer and officers were missing at the time of the interviews, no evidence that the officers were seeking legal advice from the lawyers no privilege attached to the officers’ communication with AOL attorneys

    • Officers must show subjective belief that an attorney-client relationship existed was reasonable under the circumstances. This case did not:

      • No evidence that the investing attorneys told the officers that they represent them; nor officers asking attorneys to represent them

      • No evidence that officers ever sought personal legal advice from the investigating attorneys

      • At time of interview, officers were fully apprised that the info they were giving could be disclosed to OAL

  • But the water-downed Upjohn warnings given by investigating attorneys to officers is not implicitly accepted by the court. If there had been, in fact, an attorney-client relationship, they would not have been free to waive officer’s privilege when a conflict arose.

    • But no conflict of interest at the time of interview (before Dec 2001)

  • What should a lawyer conducting an internal investigation do to avoid the risk the court identifies? Lawyer should make it clear + put in writing

• Corporate officer/ employees will enjoy privilege if he can establish the lawyer were part of a joint representation (him and co.) but almost always fail. In re Bevill Test:

  1. Officer approached counsel for the purpose of seeking legal advice

  2. When officer approached counsel, they made it clear that they are seeking legal advice

  3. Counsel saw fit to communicate in their individual capacities, knowing a possible conflict could arise

  4. Convo with counsel were confidential

  5. Substance of convo did not concern matters within the co/ general affairs of the company

• If company lawyer also represent the employees on a common matter can create problem for the co. and lawyer, if 2 client later take different position

• Joint representation is possible. But sometimes have outside counsel to interview and decide if the company lawyer can also represent the witness

• Government lawyers: Owes loyalty to gov, which also controls the privilege for communications between officials and gov lawyers. Current/ former official cannot assert personal privilege for these

2. Change of Corporate Control P.442

• “We’re Still on the Same Side” (442)

  • Facts: Vasco (a subsidiary of Parent co Matterick) that the firm [same counsel of parent & subsidiary] represented in purchase of vineyards. 5 years later, Firm represents sale of Vasco to Cortina. Matterick warrant acreage of vineyard. Vasco renamed Vasco Prime. Cortina then sues Matterick for breach of warranty claiming the vineyards are smaller than warrantied.

  • Matterick’s lawyer argues that “We are not switching sides. We represented Matterick on the sale and we represent it now.” What would you argue for the buyer in response?

  • How would you apply Rule 1.9(a) here? 1.9(a) A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person’s interests are materially adverse to the interests of the former client unless the former client gives informed consent, confirmed in writing.

  • Firm represented V in selling cannot now represent M in dispute between V and M

  • What could Matterick have done to avoid losing its lawyer in the event of an arbitration or lawsuit for breach of warranty?

    • Broad language used transfer client-relationship

    • If don’t want should have negotiated in the contract

Tekni-Plex v. Meyner & Landis (443)

• Facts: Old Tekni-Plex merge into Acquisition (a shell co. created to acquire TP) renamed to new TP. M&L helped get environmental...