ACC Update - December 16, 2005 (Plain Text Version)

CLOs Provide Thought Leadership on Privilege Erosion

Stasia Kelly, Executive Vice President & General Counsel, MCI Communications

Very little is more important to my CLO colleagues and me than the trust and strong relationship we share with our senior management and our boards. Without it, we cannot function as an effective advocate or counselor to our clients. I’ve heard too many CLOs relate chilling stories about privilege erosion, and I know for a fact that it’s impacting the way in-house lawyers practice as well as the likelihood that clients will seek out in-house counsel when sensitive matters arise.
Privilege erosion is on the rise in a wide range of contexts, including auditor ‘requests’ for information, in prosecutorial settings, in the courts and in third party discovery. While some in government may say that prosecutorial tactics and charging factor analyses do not result in any appreciable change in demand for waiver of attorney-client privilege, the real life experiences in our daily practices say different. Erosion of the privilege is damaging corporate compliance initiatives and delaying or preventing the effective delivery of vital legal services.

I recently hosted an ACC CLO ThinkTank session that brought together several Fortune 500 CLOs to discuss experiences and the ‘word on the street’ with regard to privilege erosion, and to develop ideas on possible actions to address these growing challenges. Joining me for this session were: Tom Dale (Rolls-Royce North America), Reggie Hedgebeth (Circuit City Stores, Incorporated), Muzette Hill (Ford Motor Credit Corporation), Ann Kappler (Fannie Mae), Linda Madrid (CarrAmerica Realty Corporation), Dean Manson (Hughes Network Systems), and Logan Robinson (Delphi Corporation).

Some key takeaways from our session on included:

• There is a need for education on privilege—both in the in-house context for clients and lawyers, and also with regard to outside constituencies.
• A disconnect exists between what leaders at the DOJ (and other enforcement officials) perceive is occurring with regard to waiver requests and what corporations are experiencing.
• Governmental practices resulting in erosion of privilege are changing the way in-house lawyers practice, including driving lawyers to resort to inefficient methods of communication and forcing clients to forego desired counseling; the result is a chill on the communications and perverse disincentives for lawyers to provide quick, remedial responses and well-thought out, longer term compliance initiatives.
• The concept of limited waiver creates a predicament, putting us on a slippery-slope toward the day when corporations will have to say yes to any government request for privileged documents so long as they are accompanied by an enforceable confidentiality agreement.
• Questions regarding privilege and the need for privileged documents in the audit context are becoming increasingly common and changing the ways in-house lawyers interact with auditors and even internal controls managers.

Our ThinkTank participants also identified a number of ideas for action items going forward. Many of these ideas were shared with ACC’s Advocacy Committee and are informing future advocacy initiatives on behalf of the in-house bar. View the Executive Report from this ACC CLO ThinkTank session.

Future issues of ACC Executive Bulletin will feature summaries from other ACC CLO ThinkTank sessions on such topics as in-house response to emerging prosecutorial tactics, private company CLO concerns and compensation.

Stasia Kelly, Executive Vice President & General Counsel, MCI Communications

Are You Paying Too Much for Outside Counsel?

Does paying $260 an hour for outside counsel support on tax issues seem reasonable? What about $530 an hour for the same service? Hourly rates for law firms can vary by location and practice area. Sometimes they can vary a lot. The 2005 ACC/Serengeti Managing Outside Counsel Survey collected data on hourly rates for outside counsel work across 18 major markets and 13 practice areas. The area of tax law provided a prime example of the huge disparity in the rates reported with rates averaging $530 per hour in Boston and rates less than half that reported in Detroit. For litigation, New York had the highest average rate at $428 an hour, but you could pay as much as $750 an hour (the reported high). Meanwhile, if your litigation needs were in Seattle, you might only be paying the average of $235 an hour. Find out how your legal fees stack up. Get your copy of the 2005 ACC/Serengeti Managing Outside Counsel survey.
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CLO Moves

N. Cornell Boggs III has been appointed Chief Legal Officer and Group Vice President, Public Affairs of Coors Brewing Company … Barbara Kolsun has joined 7 For all Mankind as Senior Vice President & General Counsel … Richard Willard has joined Bristol-Meyers Squibb Company as Senior Vice President & General Counsel … William E. Simon & Sons, L.L.C. has promoted Charles F. Festo to General Counsel … Ivan K. Fong has joined Cardinal Health, Inc. as Executive Vice President and Chief Legal Officer … KB Toys, Inc. has promoted Scott Z. Hochfelder to General Counsel and Secretary … Randi Val Morrison has joined CSK Auto, Inc. as Vice President, General Counsel, and Secretary … Robert Shanks has been appointed Vice President of Legal for Raytheon’s Washington Office, and Vice President and General Counsel for Raytheon International, Inc. … Republic Financial Corporation has promoted Gary Burhart to Vice President of Business and Legal Affairs … Cardium Therapeutics and Aries Ventures have appointed Tyler M. Dylan Chief Business Officer and General Counsel … David Fowler has been appointed the new Vice President and General Counsel for Raytheon Technical Services Company LLC … VNUS Medical Technologies has appointed Charlene A. Friedman Vice President, General Counsel, and Secretary … The Department of Housing and Urban Development has appointed Keith E. Gottfried General Counsel … Jerry Temko has been promoted to Vice President, General Counsel, and Chief Compliance Officer of Astellas Pharma Europe, following the merger of Yamanouchi and Fujisawa pharmaceutical groups … DataLogic International has appointed John Vangel General Counsel.
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Preparing for a Government Investigation

If you have questions about how you would respond to a government investigation or how your company should react if a subpoena arrives at the front door, see our latest white papers on the subject:

• Corporate Counsel: Caught in the Crosshairs?
• Responsive Measures for Government Investigations

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Training for New-to-In-house Attorneys

As the chief legal officer for your company, you likely have attorneys reporting to you who are new to the in-house profession or are new to a management role. Are you looking for training to acquaint them with the inner workings of a corporate legal department? Look no further, ACC is offering two opportunities in 2006 to educate your "new to in-house" legal staff, regardless of how experienced they may be in their substantive practice.

ACC Europe’s Corporate Counsel University (February 12-14, Amsterdam Marriott, Amsterdam, Netherlands) will teach your attorneys how to excel in their new role with a focus on the basics needed to succeed. Registrants will learn first-hand from other in-house counsel who have been there and build a network of peers. Open only to in-house counsel, the meeting will provide information on such topics as how to be a successful in-house practitioner, building and maintaining outside counsel relationships, financial analysis, and improving negotiation skills. Attendees will have the chance to network and establish contacts that will help them long after the meeting. Get more information about Corporate Counsel University Europe

ACC’s 4th Annual Corporate Counsel University: New Challenges, New Solutions (May 21-23, Baltimore Marriott Waterfront, Baltimore, MD) will teach your new counsel or legal managers how to excel in their new roles. Registrants will learn first-hand from in-house colleagues, with a focus on the basics needed to succeed. Like all ACC programs, Corporate Counsel University will emphasize practical tips and hands-on advice, with plenty of opportunities to network with faculty and other attendees. Learn more and register for Corporate Counsel University

Sending your new-to-in-house attorneys and legal managers to either Corporate Counsel University is an investment in your company’s legal department and the quality services it can provide to your client.

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