RULE 11

Don’t Let the Lawyers Throw You Under the Bus

Beware: Company Lawyers Can Throw You Under the Bus

Introduction

At the end of the day, company lawyers serve the interests of their company. Employers have gotten away with arguing that that disclosures to these lawyers are covered under attorney-client privilege, and a whistleblower going after a lack of action by the compliance team may not be able to use their disclosure as evidence. The New York State Bar Association Committee on Professional Ethics released an opinion warning employees of this dynamic, and laid out a script for those calling up the company hotline.

That is why author Stephen Kohn advises those with insider knowledge to contact their own counsel when weighing whether or not to go internal first. The fact of the matter is, most report internally, and most never get a response – they just paint a target on their back. So it’s almost always never good to report internally…one should really just keep quiet and speak with an attorney. If the company offers you a lawyer once they begin to be investigated, play along so you don’t stick out. Your independent counsel can advise you as to how to go about the investigation that you initiated.

Practice Tips

Upjohn Co. v. United States, 449 U.S. 383 (1981) (Supreme Court decision discussing when attorney-client privilege applies to a compliance investigation).
In re: KBR, 756 F.3d 754 (D.C. Cir. 2014) (broadly defining corporate attorney-client privilege in the context of compliance investigations).
U.S. ex rel. Barko v. Halliburton Co., No. 1:05-cv-2276, Opinion and Order dated March 6, 2014 (D.D.C.) (district court docket in the KBR cases).
New York State Bar Association Committee on Professional Ethics Opinion 650, July 30, 1993 (ethical rule discussing the ethics attorneys are supposed to follow when participating in compliance programs and investigations).
Here is how corporate attorneys discuss these issues: Sara Kropf, “Upjohn Warnings from Both Sides of the Table,” Kropf Moseley (Mar. 30, 2017); Simon and Song, “Upjohn and the ‘Corporate Miranda Warnings’ During Government Investigations,” Kirkland & Ellis.
Communications with company lawyers may not constitute a protected disclosure unless a specific law protects internal whistleblowing. See Rule 5 (Trap #5) and Rule 10.

Respected Authors on Compliance Issues

Donna Boehme

“DOJ Tells HSBC and Corporate America: Reform Your Compliance Departments,” Corporate Counsel (Dec. 20, 2012)
“Making the CCO an Independent Voice in the C-Suite,” Corporate Counsel
From Enron to Madoff: Why Many Corporate Compliance and Ethics Programs Are Positioned for Failure, Rand Center for Corporate Ethics and Governance (2009)

Jeffrey Eglash

“Avoiding the Perils and Pitfalls of Internal Corporate Investigations: Proper Use of Upjohn Warnings,” ABA Section of Litigation Corporate Counsel CLE Seminar (ethical rules governing attorneys who work on or manage corporate compliance investigations)

Michael D. Greenberg

Transforming Compliance: Emerging Paradigms for Boards, Management, Compliance Officers, and Government, Rand Center for Corporate Ethics and Governance (2012)
Culture, Compliance, and the C-Suite: How Executives, Boards, and Policymakers Can Better Safeguard against Misconduct at the Top, Rand Center for Corporate Ethics and Governance (2013)
For Whom the Whistle Blows: Advancing Corporate Compliance and Integrity Efforts in the Era of Dodd-Frank, Rand Center for Corporate Ethics and Governance (2011)
Directors as Guardians of Compliance and Ethics within the Corporate Citadel: What the Policy Community Should Know, Rand Center for Corporate Ethics and Governance (2010)

Jacelyn Jaeger

“The Importance of Splitting Legal and Compliance,” Compliance Week (Dec. 2011)

Michael Volkov

“Redefining the Relationship of the General Counsel and Chief Compliance Officer,” p. 8, Rand Center for Corporate Ethics and Governance (May 28, 2014) (comprehensive article supporting a narrow interpretation of the privilege in compliance investigations).

Whistleblowers as a Confidential Informant

If a whistleblower is acting in the capacity of a confidential informant, are they allowed to attend attorney-client meetings held by the company. The short answer is yes, but there are restrictions, see:

David R. Lurie, “Sixth Amendment Implications of Informant Participation in Defense Meetings,” 58 Fordham L. Rev. 795 (1990)

The leading Supreme Court case on the issue is;

Weatherford v. Bursey, 429 U.S. 545 (1977)

In Weatherford the Supreme Court explained that a confidential informant would be put in a position of unmasking him or herself if the informant refused to participate in a meeting with attorneys, if asked to do so by the target of the investigation.

According to the Court, prohibiting informants from participating in such meetings “would require the informant to refuse to participate in attorney-client meetings, even though invited, and thus, for all practical purposes, to unmask himself.”

Ethical Codes of Conduct

Ethics Opinion 269:

“Obligation of Lawyer for Corporation to Clarify Role in Internal Corporate Investigation” (DC Bar. January 1997)

New York Rules of Professional Conduct, based on the American Bar Association (ABA) Model Rules of Professional Conduct. The Model Rules have been adopted, in whole or in part, and sometimes in variation, as the rules of professional conduct for attorneys in forty-nine states, the District of Columbia, and four of the five inhabited U.S. territories.

ABA Model Rule 4.2: “Communication with Person Represented by Counsel”
ABA Model Rule 4.3: “Dealing with Unrepresented Person”
The ABA Model Rules of Professional Conduct

Society for Corporate Compliance and Ethics and Health Care Compliance Association:

“Compliance Professionals Overwhelmingly Reject General Counsel Reporting Structure,” P.R. Newswire (Mar. 11, 2013) (survey of compliance professionals finding that 88.5 percent oppose general counsel serving as chief compliance officer).

In Congress

The chairman of the Senate Judiciary Committee provided strong testimony opposing efforts to require employees to communicate with corporate compliance programs, and pointed out the conflicts of interest in these proposals:

“Statement for the Record by Senator Chuck Grassley of Iowa, Chairman, Senate Judiciary Committee at a House Judiciary Subcommittee on the Constitution and Civil Justice Hearing on ‘Oversight of the False Claims Act,’ April 28, 2016.”

“It doesn’t take a pig farmer from Iowa to smell the stench of conflict in that arrangement.” — Senator Charles Grassley on General Counsel’s running compliance programs

Frequently Asked Questions

Related Rules

RULE 32
Your Disclosures Must be Protected Under Law
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RULE 31
Winning a Case
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