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Ethical Issues in Investigationsand Compliance forIn-House Counsel
CLE Seminar for In-House CounselJune 8, 2016Chicago, Illinois
Brian O'BlenessPartnerDentonsKansas City+1 816 460 [email protected]
Monica ThurmanAssistant General Counsel andDirector, Business ConductHalliburton+1 713 839 [email protected]
Stephen HillPartnerDentonsKansas City+1 816 460 [email protected]
The complexity of representing thecompany when it acts only throughits people.
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(c) "Firm" or "law firm" denotes a lawyer or lawyers in a lawpartnership, professional corporation, sole proprietorship orother association authorized to practice law; or lawyersemployed in a legal services organization or the legaldepartment of a corporation or other organization.
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"Law Firm" means Legal DepartmentModel Rule 1.0 Terminology
The "client" is the company itself.
(a) A lawyer employed or retained by an organization represents theorganization acting through its duly authorized constituents.
The lawyer must explain that to constituents of thecompany when the interests may be adverse
(f) In dealing with an organization's directors, officers, employees,members, shareholders or other constituents, a lawyer shallexplain the identity of the client when the lawyer knows orreasonably should know that the organization's interests areadverse to those of the constituents with whom the lawyer isdealing.
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Who Is the Client?Model Rule 1.13 Organization As Client
United States v. Stein, 463 F.Supp.2d 459 (S.D.N.Y. 2006)(KPMG tax shelter case)
• "Once a government investigation begins, the interests of theemployees and of the entity may diverge. . . . "
• "Employees are often unaware of the potential personalconsequences of cooperating with lawyers hired by theiremployers."
• "Even more troublesome, they may cooperate with employer-retained counsel in the belief that their communications areprotected by a personal privilege, sometimes as a result ofmisapprehension of the law and occasionally perhaps as aresult of deception, inadvertent or otherwise."
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Interests of Employee and Employer may diverge
Interacting with Employees
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• The duty to preserve confidential information of a client iscentral to the attorney-client relationship
• Requires counsel to keep in confidence all informationrelating to representation of a client
• Interviews often involve give and take of information with anemployee; if that information is confidential, Model Rule 1.6may come into play:
(a) A lawyer shall not reveal information relating to the representation of aclient unless the client gives informed consent, the disclosure is impliedlyauthorized in order to carry out the representation or the disclosure ispermitted by paragraph (b).
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What Do We Tell the Employees?Model Rule 1.6 Confidentiality Of Information
In the course of representing a client a lawyer shall notknowingly:
(a) make a false statement of material fact or law to a thirdperson or
(b) fail to disclose a material fact to a third person whendisclosure is necessary to avoid assisting a criminal orfraudulent act by a client, unless disclosure is prohibited byRule 1.6.
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The Flexible TruthModel Rule 4.1 Truthfulness In Statements To Others
(a) In representing a client, a lawyer shall not use … usemethods of obtaining evidence that violate the legal rights ofsuch a person.
Comment [1] "Responsibility to a client requires a lawyer tosubordinate the interests of others to those of the client, butthat responsibility does not imply that a lawyer may disregardthe rights of third persons [including] unwarranted intrusionsinto privileged relationships, such as the client-lawyerrelationship."
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Don't violate employees rights to obtain informationModel Rule 4.4 Respect For Rights Of Third Persons
Requires that a lawyer not state or imply that s/he isdisinterested when dealing with an unrepresented person(i.e., company employee)
When the lawyer knows or reasonably should know that theunrepresented person misunderstands the lawyer’s role in the matter,the lawyer shall make reasonable efforts to correct themisunderstanding.
The lawyer shall not give legal advice to an unrepresented person,other than advice to secure counsel, if the lawyer knows or reasonablyshould know that the interests of such person are or have a reasonablepossibility of being in conflict with the interests of the client.
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Model Rule 4.3 -- Unrepresented Persons
Impact of the DOJ's Yates Memo
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To be eligible for any cooperation credit, a company mustprovide DOJ with all relevant facts about individuals involvedin the corporate misconduct
True for civil and criminal matters involving DOJ
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Yates Memo
According to Ms. Yates herself, "I will acknowledge that ourfocus on culpable individuals may make some employeesnervous. Some may have reason to be nervous. But to theextent that there's a tension between the interest of thecompany and the interests of individuals in an internalinvestigation, that dynamic is nothing new."
Before the Yates Memo, it was common that cooperationcredit was available to a company on a sliding scale involvingthe prosecutor's judgment and evaluation of the value of thecooperation to resolution of the case.
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Impact of Yates Memo
• Avoid the "circle the wagons" meeting, phone call and e-mail
• Identify who your client is, what their interests are in theinvestigative matter, what it may take to mitigate risk(including Yates obligations) and exposure for that client
Post-Yates: Before you reach for the phone….
A question often asked during an employee interview is:
"Do I need a lawyer?"
• Cannot provide advice on that issue
• Could advise employee has right to separate counsel
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"Do I Need a Lawyer?"
Upjohn Warnings
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• This is the mechanism that has emerged to make clear there is aprivilege and the company holds it and can waive it
• The object is to limit later disputes about the attorney-client relationshipand to allow the company employee to better evaluate risk
• Need for Upjohn warnings are less clear when employee comes to in-house counsel
• Many factors to consider, however, whenever a likely conflict existsbetween the corporation and the employee, counsel should give at aminimum give a warning that s/he represents the company, not theemployee
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Upjohn Warnings
• Interviews involving only company counsel and corporateemployees are usually protected by the attorney-clientprivileged in the U.S.
• The company alone holds that privilege, not the companyemployee
• Only the company can decide to waive the privilege, not theemployee, not counsel
• If the company determines to self-report, it may discloseemployee interview content; the employee cannot preventdisclosure
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Upjohn v. US, 449 U.S. 383 (1981)
Company began an internal investigation and interviewed employees weretold by counsel that:
"We represent the company. These conversations are privileged, but the privilegebelongs to the company and the company decides whether to waive it. If there isa conflict, the attorney-client privilege belongs to the company."
Lawyer conducting the employee interview said that "counsel could represent[the employee] as well, as long as no conflict appeared."
Company later cooperates and produces privileged materials. Threeemployees were indicted and sought to prevent disclosure.
Court relied on the Upjohn warning and the differencebetween, "we can represent you" and "we do represent you"in rejecting the employees claim they were represented by thecompany's counsel.
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In re Grand Jury Subpoena, 415 F.3d 333 (4th Cir.2005)
Planning Today forInvestigations Tomorrow
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Develop a plan, explain the plan and execute the plan before you have anopen matter that raises these issues
• Gain buy in
• Examine D&O coverage
• Consider using outside counsel to explain Yates
• Communication strategies
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So in a post-Yates world what should I consider?
Questions?
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Thank You!We are very interested in your feedback -please take a moment to leave a note about this class and thepresenters on your evaluation form.
Brian O'BlenessPartnerDentonsKansas City+1 816 460 [email protected]
Monica ThurmanAssistant General Counsel andDirector, Business ConductHalliburton+1 713 839 [email protected]
Stephen HillPartnerDentonsKansas City+1 816 460 [email protected]
