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Balancing business, legal ethics

By: Erika Strebel, [email protected]//August 24, 2016

Balancing business, legal ethics

By: Erika Strebel, [email protected]//August 24, 2016

Experts weigh in on the fine line corporate counsel walk every day

Corporate counsel don’t often end up as the subject of disciplinary cases before the Wisconsin Supreme Court, but that doesn’t mean they can’t go astray just as easily as other sorts of lawyers.

Generally speaking, the state’s statutes governing attorney conduct are tailored to lawyers who have more than one client rather than those working for a single company. Even so, there is one rule that applies solely to corporate counsel.

Corporate counsel thus find themselves having to worry about one standard of conduct that other lawyers can safely ignore. That gives rise to its own set problems, says Richard Cayo, a Milwaukee attorney who specializes in defending lawyers in misconduct cases.

“It’s a situation that’s ripe with danger,” he said. “And it’s danger that most don’t see.”

Dean Dietrich, a Wausau lawyer who often represents attorneys in disciplinary cases, says that when he does see a corporate counsel get in trouble, it’s often because of a misunderstanding over attorney-client privilege. That privilege almost always applies to communications directly involving the company’s legal affairs but not necessarily to every statement made by an executive officer or employee.

Disclosures of unscrupulous activities, for instance, might not be protected – even if they were made under the assumption that corporate counsel wouldn’t let them leave the room.

“That is a problem that in-house lawyers need to be very sensitive to,” Dietrich said. “And they also need to take clear steps to identify or indicate when they are giving legal advice as compared to what would be business advice or operational advice.”

Cayo said he’s well aware of the dilemma.

“I’ve had many cases involving in-house counsel, and most all of them have to do with people claiming that their confidences have been betrayed by their lawyer when the lawyer says, ‘Hey, you told me something I had to rat you out for.’”

Dietrich says there are two steps corporate counsel can take to avoid situations of this sort. First, they should make it a point to clearly differentiate legal advice from business advice.

This can be done as easily by saying something like: “I am going to give you advice as a lawyer,” or “Our discussion is going to be protected by the attorney-client privilege.”

The same clarity is needed in emails.

“They’re really best off breaking it into separate emails because if they pledge or state that this is legal advice but then obviously it’s not, you can lose the protection of the legal advice,” Dietrich said.

Cayo says that email might be the easiest way for corporate counsel to make it clear to employees and company officers that attorney-client privilege applies in certain situations but not in others.

That’s not to say, though, that forthrightness does not come with a cost.

Lawyers who are always quick to put up a warning flag risk making employees feel uneasy. The biggest loss could be of the ability to have candid conversations.

For lawyers anxious to walk the straight and narrow path, the second step to take is to make it clear that the in-house counsel is the company’s lawyer, not the employees’ or officers’. Cayo said he has found from experience that it can be hard to dispel the misconception that corporate counsel is there to provide private legal advice to all comers.

“The problem is everyone becomes accustomed to thinking the in-house lawyer is their lawyer,” he said.

But a close look at the rules governing lawyer conduct shows that’s far from the case. State statutes stipulate not only that in-house counsel are bound to work exclusively for one client – their employer. They also make it clear that if there’s anything that company employees or officers have done that could harm the company, the attorney has a duty to report it.

“It’s an extremely uncomfortable situation to be in,” said Cayo.

Further complicating matters, private lawyers brought in by corporations for certain jobs are often under a different set of obligations. If the vice president of a company were found to be hatching a scheme involving a fraudulent stock offering, for instance,the corporate counsel would have to report the nefarious plans to higher ups.

A private lawyer would not.

“It’s sort of a fine line that’s not easy to identify,” said Cayo.


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