A Day in the Life of Lee Lawyer Presented to: Association of Corporate Counsel

November 11, 2008

by

William M. Atkinson, PartnerMark T. Calloway, Partner

Alston & Bird LLPCharlotte, NC

A Day in the Life of Lee Lawyer,Deputy General Counsel of GoodChem Co.

Following a newspaper article in June 2008 about premature roof deterioration from the use of Poly-Epox as a roofing adhesive, questions and complaints have been pouring in to Adhesives Division of GoodChem. Poly-Epox has been on the market for six years so no roofs have yet failed. The questions are what will happen after 9-10 years. Theories are being suggested Poly-Epox has a tendency to cause roof shingle deterioration in hot humid climates. The Company does not believe the accusations have any factual basis. No lawsuits have been filed. There have been rumblings about Congressional investigations and Department of Justice investigations, but no official notice has been received. GoodChem lab tests have not shown deterioration. The stock of GoodChem has not declined precipitously but GoodChem is down several points.

A Day in the Life of Lee Lawyer,Deputy General Counsel of GoodChem Co.

GoodChem is also about to embark on a major acquisition of a smaller competitor, Super Chemical, Inc.

Both of these matters are ultimately the responsibility of Lee Lawyer, Deputy General Counsel of GoodChem Co.

Problem One – 8:00 a.m., October 3, 2008

Standing in Lee’s door is Henry, EVP and in line for the presidency.

Henry: “Hello, Lee, got a minute? You know, we go back a long way. You helped me with the real estate contract on my beach house, you’re helping me establish a family trust; in short, you’ve always been there when I needed you. Well, I need to talk something else over with you. I don’t think I’ve done anything illegal, and am not even sure it is against company policy. Still, in this day and time when everyone is looking over your shoulder, I need to chat. This involves a couple of memos I received in 1998 when I was EVP for Research and Development in the Adhesives Division from one of the lab guys relating to tests on Poly-Epox in humid weather. I’m a little embarrassed, but I need to tell you something in confidence about those memos, and what I did. I want to make sure I’m okay and the Company’s okay.”

Problem One – 8:00 a.m., October 3, 2008

Lee: “Henry – It is good to see you, but . . . Uh, uh, uh . . . uh!”

Problem Two - 9:00 a.m., October 3, 2008Lee answers her phone.

Mary: “Lee, this is Mary, Head of Adhesives Division. I think we met briefly at the officers’ luncheon. I just wanted to check with you because we are in our 7th year after 2001. As you know, we have a strict policy of deleting all paper and electronic data during the seventh year following their creation. In accordance with our normal policy, we will begin deleting all backup tapes on emails and other data relating to lab work and testing done in 2001 on Poly-Epox. The Chief Operations Officer has told us to get rid of everything in accordance with our normal and customary policies since we are under no obligation to depart from those policies or retain the material because there is no litigation regarding Poly-Epox and we are under no obligation to keep the material. Thought you should know.”

.

Problem Three – 10:00 a.m., October 3, 2008

Thinking about Mary’s call, Lee remembers an email she received earlier. Looking, she finds the following:

Problem Three – 10:00 a.m., October 3, 2008 From: Jimmy, VP of Sales, Adhesives DivisionTo: Don, Regional Sales Manager, Adhesives DivisionDate: July 6, 2008, 9:30 a.m.cc: Lee Lawyer, Deputy General Counsel

Don:

You have my authority to pay the Widow Murphy $10,000 with regard to her allegations of a leaking roof on which Poly-Epox was used before she files suit. This is a petty claim, and I don’t want her to go start a blog about it. Someone might try to link leaking roofs with roof deterioration from Poly-Epox. That would be disastrous and would open up a can of worms we cannot afford. Even though Lee has not been involved in this matter, I am sending her a copy to make sure we have the benefit of attorney-client privilege for this communication and the settlement.

Problem Four - 11:00 a.m., October 3, 2008

Lee turns around to look at her email and is startled to see the following message to Lee Lawyer from a former sales person in the Adhesives Division, now working for a competitor:

Problem Four – 11:00 a.m., October 3, 2008To: Lee Lawyer

From: Former GoodChem Sales Person

Mr. Lawless:I always get you confused with the Lee Lawyer at GoodChem, because her name is Lee Lawyer, and yours is Lee Lawless. You know how Outlook guesses at addresses after you type two or three letters. In any event, Lee, I am glad to have you as my lawyer in my wrongful discharge claim against GoodChem. The information I have about GoodChem and their products will be extremely embarrassing for that company. I have attached to this letter the documents I have relating to GoodChem’s knowledge about the reaction of Poly-Epox to high heat and humidity. Give me a call when you get a chance so that we can discuss how best to proceed with my claim against the Company.

[Lee’s hand moves the cursor closer to the attachment . . . .]

Problem Five – 1:00 p.m., October 3, 2008

Lee, her team of outside attorneys, and the Chief Financial Officer of GoodChem have a meeting with lawyers for Super Chemical to discuss the acquisition. They are told to wait in a conference room of the Super Chemical lawyer’s office because they will be delayed for about 15 minutes. When Lee and the GoodChem lawyers walk into the conference room, one of them notices a flipchart with some writing. The first page says “Problems we need to consider in our Seller’s warranties: (1) Possible significant unfiled claims, (2) [continued on next page].” Lee looks toward the flipchart. The CFO says, “What are you waiting for? Go turn the page!”

Problem Six – 2:00 p.m., October 3, 2008

Telephone call:

Fred: “Lee, this is Fred [the CEO]. The Board thinks we should have an internal investigation of this Poly-Epox mess. We can use it as a defense to civil suits or governmental action. It will make us look good. I’d like to do it with you as a real “internal” investigation both to save fees and “ensure accuracy” as they say. But, if you don’t think that is wise, give it to Trip at Most Favored Firm who bills us over $3,000,000 a year. I think Trip will also likely reach a satisfactory conclusion. Whoever undertakes the investigation, I want to make 100% certain that all interviews and notes of those interviews will not be seen by anyone outside the Company. The final report we can show to the world, but not these internal conversations. If necessary, tear up the notes after you do the report. Thanks for your help.”

Problem Seven – 2:30 p.m., October 3, 2008 Email:

To: Lee LawlessFrom: Tommy TechDate: 2:30 p.m., Friday, October 3, 2008Subject: Super Chemical acquisition

Lee – I am Tom Tech, a staff attorney in your office working on the Super Chemical acquisition. I just got a long email from seller’s counsel with some draft documents attached that I am pretty certain have gone through several iterations. I want to run the email and its attachments through our system to check for metadata. I might be able to find out who made changes and when, and what the original documents said. We could find out if they have changed a purchase price or some of the other conditions in the contract. It would be good to know their original thinking. Do you have any problems with this suggestion?

Problem Eight – 3:00 p.m., October 3, 2008

Lee reads a letter from GoodChem’s outside counsel in North Carolina:

Problem Eight – 3:00 p.m., October 3, 2008

Dear Ms. Lawyer:

We have been working with the Company’s senior benefit attorney (Jim Jones) in Winston Salem regarding the structuring of some benefit plans for a recently acquired company. Our firm suggested a plan that would have obtained maximum tax benefit for GoodChem. It would have cost a little more this year, but would have resulted in $10,000,000 in tax savings for GoodChem over the next five years. Mr. Jones, at the direction of the Adhesives Division Manager, rejected this plan in favor of one that would cost the division less this year, but will insure that earnings targets will be met. In the long run, however, it will cost GoodChem an additional $2,000,000 in taxes in the three years after this one. I believe these officers are violating their legal obligation to act in the best interest of the company as a whole and their conduct will cause substantial injury to the organization. (Cont.)

(Cont.) I am bringing this matter to your attention in accordance with my professional obligations to GoodChem under the North Carolina Rules of Professional Conduct, Rule 1.13.

Problem Eight – 3:00 p.m., October 3, 2008

Problem Nine – 3:30 p.m., October 3, 2008

“Oh, no,” says Lee, thinking out loud. “Trip sent me a request for production of documents the other side served in that lawsuit where the seller and GoodChem disagree over the meaning of several terms in the contract. The request specifically asked for all drafts in the agreement. I worked with the business people on that document and have three copies in my file. One of them is a draft where I asked the business people to answer certain questions I noted in the margins. The second draft has my suggested changes to several of the terms that I sent to the business people to use in negotiating a contract. I guess they incorporated them. The third copy is the final agreement that I reviewed and made several notes on for my use in case questions in the future were ever asked to me about the meaning of certain terms. I never sent that copy to the business people, and it remains in my file.

What do I do?”

Problem Ten – 4:00 p.m., October 3, 2008

Lee calls her outside attorney at Most Favored Firm:

Lee: “Trip, our VP of sales got a letter from the Department of Justice who wants to talk to him regarding price fixing in the road construction industry. The VP is not involved in the investigation but we do sell products to companies in that industry. We will pay you to represent the vice president in these interviews. DOJ has not asked for documents so I don’t need you to waste time looking at a lot of documents or interviewing a lot of our sales force in order to find the problem that doesn’t exist. Just represent the VP of sales in the interviews.”

Problem Eleven – 4:30 p.m., October 3, 2008

E-mail:

This e-mail is to advise you that my client will bring a suit against you for fraudulent misrepresentation for a statement you made in the settlement of our client’s suit against GoodChem Minor Subsidiary. At our settlement conference, you insisted that we release all of our “piercing the corporate veil” claims against the parent company Good Chem. When I asked you – “Don’t you think we have a good claim? – you said “There is nothing there, our records are perfect. You don’t have a chance of proving that claim.” That subsidiary ceased operations yesterday. We think we had a good piercing the corporate veil theory and are bringing suit against you for inducing us to release the parent.

“Ha!,” said Lee. “That’s the most ridiculous claim I ever saw.”

Problem Twelve – 4:30 p.m., October 3, 2008

Lee gives the following instruction to lawyers at Most Favored Firm who are settling major litigation involving GoodChem’s products:

Lee: “The one condition I insist on if we are paying this huge amount of money is that we get a commitment from the plaintiff’s law firm that they will never represent a client who is suing GoodChem again for anything. I hate those people. I suppose we could limit the representation to the types of claims alleged in this litigation but that would only be a fallback position. If I need to put them on a $5 a year retainer, I’ll do it.”

Problem Thirteen – 5:00 p.m., October 3, 2008

Telephone call:

Trip: “Lee, this is Trip at Most Favored Firm. In connection with defending the suit brought against GoodChem by General Building Products, I just learned that one of General Building’s key witnesses, a former EVP of sales, has left the Company. I am going to try to talk with him. What do you think?”

Lee: “I don’t know, Trip. Can we get into trouble talking with him without the lawyer for General Products knowing? And are they talking to our former employees?”

A Day in the Life of Lee Lawyer

Questions?

A Day in the Life of Lee Lawyer

North Carolina State Bar Ethical Questions (919) 828-4620

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A Day in the Life of Lee Lawyer

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