ACC Update - September 29, 2005 (Plain Text Version)

Is the SEC Targeting In-house Attorneys?

Over the past four years, there has been a stream of news reports describing SEC enforcement actions and criminal prosecutions of in-house lawyers. Many in the corporate bar have questioned whether these reports constitute a trend or isolated incidents.

ACC asked John Villa, a noted defense counsel, to write an analysis of this trend: the resulting paper, “The SEC and Criminal Proceedings Against Inside Corporate Counsel” answers these questions and more.

KEY FINDINGS: The SEC has taken a strong interest in the in-house bar, and is setting the pace for other agencies. From 2002-04, there were 30 actions brought against in-house lawyers—most against chief legal officers. The ACC white paper analyzes the SEC and criminal enforcement proceedings against in-house counsel and attempts to distill common elements and themes from these cases. Among the key findings is the dramatic difference in the SEC’s approach to bringing cases against in-house lawyers and outside counsel. Notably, while the SEC has declined to initiate enforcement action against outside counsel unless the lawyer has either been held civilly or criminally liable, or has been disciplined by the bar, the agency pursues in-house counsel without regard to whether there has been an independent finding of misconduct.

Here are some of the additional common elements and themes highlighted in the whitepaper:

•    The CLO is nearly always the target.
•    Inside lawyers who relied on outside counsel advice are seldom SEC targets.
•    Financial benefit, such as high compensation, bonuses and increased stock value, is not necessary to prompt SEC enforcement.
•    Disclosures, particularly omissions in disclosures, are usually the problem.
•    A generalist lawyer serving as CLO must seek out sound advice or pay the price.
•    If you hold several corporate offices, your company failed, or you sat on a serious problem you could have taken to the board, your risk increases.

Download the full version of this important document and access our webcast replay “In-house Counsel as Targets: Fact or Fiction?”, featuring John Villa and moderated by ACC’s president, Fred Krebs.

Protect the Attorney-Client Privilege: Take Action Now!

ACC’s survey of our members released earlier this year showed that in the past four years, many in-house attorneys have personally experienced an erosion of the protections afforded by the attorney-client privilege and work product doctrine. The DOJ, state attorneys general, the SEC, and other agencies all imply that companies under scrutiny can avoid being charged at all or reduce their potential culpability if they waive their client’s privileges.

ACC is working to reverse this trend and we need your help. We are currently gathering concrete examples of these tactics to present to senior leaders at the justice department who have expressed a willingness to consider reversing their policies if they can be shown how they are being abused in the field. If you have a personal story about how your company was coerced into waiver and are willing to share it with us on a confidential basis, please contact Susan Hackett (Hackett@acca.com, 202.293.4103 x318) immediately. We will protect your anonymity in forwarding any concrete examples provided.

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Benchmark Your Approach to Key In-house Issues

ACC’s Leading Practice Profiles explore issues common to most in-house law departments and describe exactly how a variety of companies have addressed these concerns. These unique and in-depth benchmarking resources can help you identify leading practices that will improve your effectiveness. Check out the latest practice profiles:

• Training for the Board of Directors
• Job Titles for In-house Lawyers
• Law Department’s Role in Developing and Implementing Compliance and Ethics Program
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Responding to Hurricane Katrina: How You Can Help

In response to the devastation caused by Hurricane Katrina, ACC is working to help those directly affected as well as our members and member companies. One of our key initiatives is a fellowship project ACC designed to put experienced public interest lawyers into the affected regions to provide direct services to individuals and communities in need of legal assistance, as well as to oversee coordination of volunteers from private firms and corporations who want to provide pro bono assistance.

If you’re interested in supporting this worthwhile project, please contact Susan Hackett, ACC’s general counsel at 202/293-4103, X 318; hackett@acca.com. Visit the “ACC Cares” special webpage for a complete overview of ACC’s hurricane relief efforts.

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Forum on Law Department Management Announced

ACC and the ABA are presenting a general counsel forum, entitled “Reengineering Your Legal Function”, November 17-18 in Washington, DC. This invitation-only event is designed to help general counsel take the time to focus on internal management issues and how external factors influence our law departments. Compensation, budgeting and staff management will also be addressed. We will keep you informed of the details as they become available.

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