Practicing with integrity in an in-house position, whether in the private or public sector, has always required special skill; but along with the advantages of the insider’s perspective come particular challenges. The fact of having one client — the corporation or the government[1] — means that an in-house lawyer is particularly vulnerable when there is a legal or ethical “challenge” from within the organization:[2]

“Telling senior officers “no” to their proposed plans and schemes may be the right legal and ethical answer, but it can bring a particularly high price, especially if the lawyer finds that he or she has to exercise the ultimate professional recourse and withdraw from representation. Losing a major client in a law firm can have significant consequences, to be sure, but withdrawing from your one client as an in-house lawyer equates to a loss of status, income and employment, raising the ethical stakes for in-house practitioners that much further.”

Ultimately, hard as that may be sometimes, the hardest conversation a general counsel can ever have is to say to the CEO, ‘I’m not your lawyer, I’m the company’s lawyer.’

– Robert Bostrom, General Counsel, Abercrombie & Fitch Co.[3]

Remaining ethical, independent, and professional in an in-house practice requires a level of personal sacrifice and dissociation from the “business team” not demanded of almost any other corporate player.[4]  Appropriately resisting a senior business partner requires a depth and strength of character that not every lawyer possesses.[5] It’s not easy to stand on ethics and principle, particularly when your livelihood hangs in the balance.[6]

However, in-house counsel have a wider role. They have a “duty to their client and their company”, as well as a “higher duty of the rule of law and to act in an ethical way.”[7] Whether wanted or not, pursuant to the Rules of Professional Conduct[8] – and legal duties imposed by law in some western countries – General Counsel and in-house counsel “have become the moral conscience of the company or government body for which they are working”.[9] Often sitting at the “right hand of their CEOs”, General Counsel and their legal team are expected to play “a strong and necessary independent role”, guiding the organization “towards ethical behaviour along with wealth creation for shareholders”.[10]

In this environment, as each new corporate scandal appears to inevitably arise, we must ask the question – “where were the lawyers”? – the “damning question” first formulated by Judge Stanley Sporkin about corporate misdeeds decades ago and “repeated in virtually every major corporate scandal since”.[11] What was the role played by the internal legal teams?  Whatever the answers may be, it is increasingly accepted that the General Counsel and their in-house legal department’s attitude towards legal ethics and an organization’s ethical behaviour when ‘doing business’ have become interwoven.[12]

Lawyers are lawyers first and business people second. As such, lawyers do not have a choice when it comes to ethics and values. The assessment of professional responsibility and ethics inherent in each decision a lawyer makes is not a consideration for the average business person.

– Cheryl Foy, Defining the boundaries of in-house counsel[13]

 A direct – and unhealthy – relationship exists between corporate malfeasance and the approach that an in-house lawyer adopts to his or her role.  Recent criticism levelled at in-house lawyers within News International (illegal newspaper phone hacking scandal in the UK),[14] Volkswagen (DieselGate),[15] General Motors (concealment of defective ignition switches),[16] Deutsche Bank (LIBOR bid rigging scandal),[17] Wells Fargo Bank (fraudulent customer accounts scandal),[18] and GlaxoSmithKline (bribery scandal in China)[19] together with the historical fall-out for in-house lawyers – such as at Enron, [20] Arthur Andersen,[21] and the Global Financial Crisis[22] –  are critical examples where unethical or inappropriate in-house legal attitudes and corporate scandals go hand in glove.[23] Resolving the tension between business and the required independence of General Counsel and in-house legal to act in the best interest of the corporation (their client) as both partners and guardians face a number of obstacles, including:[24]

“Negative business attitudes about lawyers; business leaders’ lack of understanding about law and policy; a leader’s overbearing personality; group pressures to conform; inside lawyer fear of CEO retribution; problems of having only one client; and lawyer concern about their compensation (either withdrawal of unvested benefits or lack of future increases). In many recent scandals—from accounting fraud to improper options backdating to global bribery to the credit crisis—general counsel and inside lawyers, in their eagerness to be partners, have failed as guardians. They did not act with independence and courage; they failed to ask broad, probing questions about dubious actions; they failed to say “slow down” or “stop.”

Ultimately, the General Counsel’s role as a “partner” to the CEO must be balanced with their role as a “guardian” to the company. This is an important and delicate balance.[25] To be successful, the Board must share and communicate this partner-guardian vision to the CEO, so that all parties are aligned in the decision-making process.[26]

As a steward [CEO, Board of Directors], you try to leave the company in better shape for your successor than it was handed over to you by your predecessor.

– Jean-Pierre Jeannet and Hein Schreuder[27]

 An Evolutionary Crossroads

To some commentators, it appears to be “increasingly evident” that some global organizations have a leadership and corporate culture that “still see the law” today “as an obstacle to be overcome rather than a boundary to work within” – their executive leadership and Boards appearing to be both “arrogant and dismissive of the law”.^[28]

The role of general counsel and in-house legal in the corporate context currently sits at an evolutionary crossroads; the function can either continue embracing the negative entrepreneurial tendencies that, left unchecked, jeopardize the organizations that General Counsel serve, or it can aspire to the higher professional standard or role of the lawyer-statesperson.[29] To function effectively as a lawyer-statesperson in a complex CEO-led corporate organization, the General Counsel must assume two aspirational roles: (1) partner to the board and business leaders, and (2) guardian of the corporation.[30] This involves leadership, and shared responsibility (as strong business partner for the CEO and other business leaders), not just for the corporation’s legal matters but for its positions on ethics, reputation, public policy, communications, corporate citizenship, ‘business in society ‘ issues, and geopolitical trends.[31] The essence of the role must move beyond the question – “is it legal?” – to the ultimate question – “is it right?”:[32]

 “To discharge this foundational responsibility, the general counsel as lawyer-statesperson must function, often simultaneously, in the three fundamental roles of a great lawyer: as technical expert, wise counselor and accountable leader. …

General Counsel must accept the binding force of existing law—and not supinely follow improper business pressure—even though that law may be unwise or politically motivated. Leaving a country or seeking to change the law are acceptable courses of action in the face of a “bad” law. Ignoring it, weighing costs and benefits of noncompliance or interpreting away its impact through non-credible hyper­ technicalities are not. …

The fusion of the partner and guardian roles turns on GC integration into the core activities of the corporation. This means being at major corporate decision meetings (strategy, budget, deals, new products, new geographies, etc.) and being deeply involved in implementation of those decisions.”

Legal scholars have suggested that this role for General Counsel – and their in-house legal teams – will provide the “necessary antidote to the role’s current ailment” as it requires a set of value-laden attitudes about the importance of law and ethical behavior to economic success.[33]

Culture is a powerful force that can cause people to make decisions that aren’t in their companies’ best interests. And when the status quo doesn’t allow for honest internal communication, businesses can end up facing disaster.

– Bob Glazer, The Biggest Lesson from Volkswagen: Culture Dictates Behaviour [34]

Today, it is generally seen as a best practice for the General Counsel to have a direct reporting line to the CEO.[35] However, bringing an issue involving illegal or unethical conduct to the attention of executive leadership, and requesting action, “when it can put a career at risk” can be particularly difficult “when lawyers are caught up in a hidebound culture”[36] and lack true independence – being subject to “pressure and reprisals” from the CEO and executive leadership team.[37]

For this reason, among others, to be successful, a General Counsel and his or her legal team (i.e. line lawyers) must have a strong degree of independence (to elevate concerns about financial, legal, ethical, or reputational issues), and  the full backing and support of the Board of Directors.[38] To ensure good governance, several different recommendations have been made over the years, including that (a) Boards organize private meetings with the General Counsel twice yearly (similar to private meetings with outside or internal audit),[39] (b) General Counsel “have the right to bring controversial issues to the Chairman or individual board members without the prior consent of the CEO”, or (c) General Counsel have a dotted line reporting relationship to the Board.[40]

However, as the American Bar Association’s corporate governance task force noted, “the general counsel may be reluctant to communicate with the board of directors” for fear that doing so will “destabilize the relationships among senior executive officers and directors”. This is particularly relevant for in-house lawyer further down the organizational chart with no access to the board of directors.[41] Whatever governance process is utilized, to avoid the risk of the General Counsel losing the CEO’s trust and/and destabilizing relationships, it should be initiated by the Board.[42]

Indeed, some academic commentators advocate that “General Counsel should be removed from the control of corporate managers [in particular the CEO] and report only to an independent committee of the company’s board to ensure true independence”.[43] The board should approve the General Counsel’s appointment and termination.[44] Formalizing the General Counsel’s role and access to the board is one thing. However, in the end, it is ideally the General Counsel who has to attain a level of trust with board members such that they will turn to him no matter what the governance structure of the company might be.[45]

Responsible executive leadership, strong support for the General Counsel and legal team, and an embedded culture of integrity are integral to an organization’s success in the 21^st Century, and a critical item on every Board of Director’s agenda.[46]

In-house counsel are hired, evaluated, compensated, and fired by people who cannot be permitted to override their judgments about ethics and wrongdoing within the corporation. The rules of professional conduct are clear — in-house lawyers must see that right is done within an organization regardless of the personal consequences.

– Cheryl Foy, Defining the boundaries of in-house counsel[47]

The Challenging Dilemma – unethical/illegal corporate conduct & the slippery slope

This age of disruption and upheaval – and the threat posed by even more competition and disruption on the horizon – can create pressures and inappropriate incentives within an organization that may trigger unethical behaviour.[48] The number of high profile corporate scandals within the first two decades of the 21^st Century[49] alone have distressingly exposed widespread arrogance and unethical conduct, greed and malfeasance, fraud, conflicts-of-interest, preferential treatment, corruption, insider trading, bribes, money laundering, price fixing, concealment of evidence, and Ponzi schemes “on an unthinkable scale”.[50]

In this environment, corporate scandals and collapses are reminders that, in a modern corporate environment, business and legal ethics have become intrinsically connected.   The fall-out associated with corporate misconduct provides salient ethical lessons for not only business but also the in-house and wider legal profession.[51] Just this week the former CEO of Barclays Bank (and three former executives of the lender) became the first British bankers – and the most senior bank executives to be charged anywhere in a crisis era case – to face criminal charges for actions taken during the global financial crisis.[52] The Financial Times of London reported that British authorities had also questioned former Barclays General Counsel Mark Harding as part of the investigation which began in 2012. The bank has since reorganized its management as well as its legal department, with General Counsel Harding and Deputy General Counsel Michael Shaw among those departing.[53]

Lawyers as a group need to come clean about their participation in the global financial crisis. One thing no one ever talks about is the lawyer’s role in the crisis. But none of the bad things we have read about, not a single one, would have happened without a sign-off at one or more key points from a lawyer. Someone in the legal department said “go ahead”.

– Whistleblowers and the In-House Lawyer: A question of ethics and objectivity, GC Magazine[54]

There are a number of drivers and root causes that may lead to ethical misconduct and poor behaviour and practices within a particular organization (i.e. problematic corporate culture, ‘growth at all costs’ business model; lack of accountability),^[55] and these themes cuts across businesses, industries, and sectors. It would be naive to think that no CEO or employee ever felt pressured, afraid or threatened; that all Boards can maintain their professionalism and objectivity; that all C-Suite executives can resist the temptation of overly risky behaviour, of cutting corners, rationalizing the breaking of rules, or participating in malfeasance. But, unfortunately, this is not the case.[56]

For General Counsel and lawyers who practice in-house, there will almost inevitably come a time that they will experience either tacit (i.e. organization’s operating culture) or explicit (i.e. asked or directed by a superior or business partner) pressures or incentives to “compromise” professional judgment and ethics: “to fit in, or go along with” a problematic, unethical or illegal “business decision”.

VW is driven by a ruthless, overweening culture. Under Ferdinand Piëch [Chairman of the Volkswagen AG Supervisory Board] and his successors, the company was run … with … a high-octane mix of ambition and arrogance … It’s a culture that mandated success at all costs.

– Hoaxwagen: How the massive diesel fraud incinerated VW’s reputation, Fortune[57]

In-house lawyers now have a role that extends beyond providing technical legal services and litigation management into matters at the heart of proper governance of organizations – but, unfortunately, for which ethical training and education may have been historically inadequate,[58] or at best only addressed in a general nature.[59] The rules of the profession requires a lawyer to “report up” when they become aware of misconduct – and this may be a particularly difficult task when the corporate client is the lawyer’s employer and “sole source of income”, such that “ensuring the company does not suffer from internal misconduct can conflict with a desire to protect ones’ job”.[60] You are now facing one of the most challenging dilemmas of your career:[61]

“At some point in our professional careers, many of us will likely encounter a situation in which we are asked—perhaps told—to do something we believe to be wrong or even illegal. Most of us are not prepared for this when it happens.  This lack of preparation enables us to fall prey to rationalization—our own and that of anyone else who may be attempting to coerce us to act. Rationalization is the means whereby good people do bad things. It is the road down which many good people have traveled and found at the end an orange jumpsuit bearing their new name—a prison ID number.

Think this could never be you? Consider this: 80% of individuals convicted of white collar crimes are first time offenders.”

If Volkswagen AG were a U.S. company, its general counsel — faced with management that refused to fix violations — would have had to resign, go to the board or go to regulators.

– Robert Bostrom, General Counsel, Abercrombie & Fitch Co.[62]

In-house lawyers – in order to be prepared to appropriately respond to these type of situations – should be trained to understand that legal and strategic astuteness require a set of value-laden attitudes about the importance of ‘law and ethical behavior’ to ‘economic success’. They are intertwined: “business decisions consist of continuous, interrelated economic and moral components”.[63] When these interests appear to conflict, in-house counsel and business leaders will then be positioned by education and training to “reframe issues and refine tactics” until the corporation’s “legitimate business objective of ‘winning’ in the marketplace is being advanced in an effective, legal, and above board manner”.[64]

An in-house legal department’s culture and training – if appropriate – will provide the safeguards to ensure there is a consideration not only about what the corporation “can do but also what it should do”.[65] The goal is to empower the business leaders within the organization “to share the responsibility” of being the “guardian of the moral capital”: both counsel and business executives and managers can better protect that capital when they embrace the idea that ‘the moral aspects of choice’ are the ‘final component of strategy.’[66]

Business leaders and managers and in-house counsel can be more effective drivers of both ‘compliant corporate behavior’ and the creation of ‘sustainable value with integrity’ when they work together as strategic partners—that is, when legally astute business personnel and strategically astute in-house lawyers form first-class teams “to be true partners in value creation”:[67]

“Counsel need to more actively promote legal and ethical compliance, but so do their corporate clients. Law, ethics, and compliance are just too important to be left to the lawyers, so managers must be legally astute and insist on lawyers who are strategically astute. Unfortunately, many managers leave business school ill-equipped to manage the legal and ethical aspects of business. Many lawyers lack the business expertise necessary to be true partners in value creation. Law schools can help fill that gap, just as business schools can promote ethics, legal literacy, and the exercise of informed judgment.”

Nevertheless, it is not a ‘perfect’ business world, and as such no lawyer should accept an in-house practice unless he or she has the capability and the willingness to push back against unethical corporate behaviour and to be a leader promoting positive values and a respect for the law. Why? Because – as noted by a Canadian General Counsel Cheryl Foy – we are in the “house,” and often find ourselves resident in an organization at the beginning as things start to head toward the slippery slope.[68]

As well, setting aside that lawyers are ethically required to do the right thing (and act in the best interest of their client, the corporation), by not acting ethically and appropriately the lawyer runs the risk of personal and corporate liability, and may well find themselves “swept up in” regulatory proceedings, civil suits, criminal investigations, and even potentially jail.[69]

There is a recognized and clearly articulated need for ethical and responsible leadership – in significant part – due to the apparent deficit of integrity, ethics, and principled judgment on Bay Street and Wall Street.[70]  As General Counsel, or as in-house counsel, there are potential negative consequences for speaking up, as well as for complying. It can feel like a ‘lose-lose’. We face a tough choice. Do we go along to get along or do we resist? How we address such disputes can have serious consequences for our organization and ourselves:[71]

“Legal leaders in a corporate setting must have the courage to speak up and prevent stupid or potentially illegal things from happening.

Not only do they need to know the difference between pragmatism and inappropriateness; they also need to have the guts to call out and stop decisions that are legally inappropriate, and to then stand their ground. Ultimately, every lawyer who serves in a leadership position in a company has to be willing to resign from their position at any time if they are thwarted in doing the right thing.”

There lies the rub for us as counsel, being frightened of implications. We, as inside counsel, have the duty to our clients (the corporations for which we work) to recommend against, avoid, and sometimes report — shenanigans. These usually appear … as small potatoes type stuff … At the other end of the spectrum, when a major corporate player is at the heart of the issue, it can be the most harrowing and difficult time in a GC’s life.

– David Mowry, Above the Law[72]

Like external law firm lawyers, in-house lawyers will confront a wide range of ethical issues over the course of their careers. Unlike law firm lawyers, in-house counsel have fewer clear guideposts to help them navigate the ethical landscape.  In The Inside Counsel Revolution: Resolving the Partner-Guardian Tension, Ben Heineman notes that “the greatest challenge for general counsel and other inside lawyers is to reconcile the dual  –  and at times contradictory  –  roles of being both a partner to the business leaders and a guardian of the corporation’s integrity and reputation”.[73]

This is the “tension that may well be baked into the job”, that requires the General Counsel or individual corporate lawyers to resist inappropriate pressure and “lead in helping to steer the corporate ship in the right direction”.[74]

This is a particularly unique ethical challenge facing in-house counsel within the confines and constraints of their corporate client.  Without the support of the Board of Directors and a strong corporate culture of integrity, there is a concern that “with increasing frequency” corporate counsel “are succumbing to economic, structural and behavioural pressures to stay in an increasingly narrow lane demarcated by the law’s four corners”.[75]

My life has become a life of regret. I can certainly see where I was too trusting … I should not have accepted the payments based on what David Radler [former deputy chairman and chief operating officer of Hollinger International] told me.

– Peter Atkinson, Hollinger’s former Vice-President and General Counsel, convicted of fraud and sentenced to federal prison with CEO Conrad Black and COO David Radler[76]

Can GC and In-House Legal ‘truly’ exercise Independent Professional Judgment to Detect/Deter Corporate Misconduct?

 Although the General Counsel must be a strong business partner for the CEO and other business leaders (to help the company but also to grain credibility), he or she must, at the same time, be guardian of the company (whom the General Counsel actually represents). As noted by Ben Heineman, the choice for General Counsel (and inside lawyers generally) must be balanced, it is not an “either or”: it is not to become a “yes person” for business leaders and be legally and ethically compromised, or alternatively to be a conservative, entrenched “naysayer” ultimately excluded from core corporate activity and decisions. Being at the table to assess facts, law, ethics, risk and options—to help find an appropriate way to accomplish business goals—is essential. Resolution of this “tension” is key to a company’s high performance with high integrity.[77]

 The General Counsel role has evolved significantly in the past few decades.[78] General Counsel are no longer simply lawyers. They manage a legal department with tight resources in a complex environment; they are the chief counsel to the CEO and the Board of Directors on a wide-ranging set of issues, not just legal matters; and they increasingly play a key role in shaping strategy. As the business environment has become more regulated and global, the general counsel has become an integral member of the executive team.[79]

The skill set for today’s General Counsel include the ability to place legal issues in a larger business context, embrace risk and make decisions, communicate with business partners in language they can relate to, and work seamlessly with the executive team and the Board of Directors to make productive decisions about operations and strategy, which has become increasingly global in scope. General Counsel must perform a delicate balancing act between being trusted and active members of the management team (i.e., having a “seat at the table”) and maintaining their independence:[80]

“To serve in this role, future GCs will need to possess the managerial courage to say “no,” even when it is unpopular. To do this effectively, they will need to have excellent communication skills and emotional intelligence to ensure they are constructive in their assessment of risk and rewards in a business context.”

Some commentators have gone so far as to suggest that in-house lawyers are best positioned to fulfill the gatekeeping role of ensuring that companies comply with both the letter and the spirit of the law. Notwithstanding this general acceptance, however, there was little systematic, empirical research on in-house legal departments:[81]

“The claim that in-house counsel are capable of exercising the kind of independent professional judgment required to detect and deter corporate misconduct is not without detractors. In the wake of Enron and the GFC [Global Financial Crisis], some academic commentators have begun to challenge whether internal counsel are too dependent on their corporate employers to act as gatekeepers and ensure compliance with the securities laws and other public-regarding legal rules, especially when compliance might conflict with corporate profits. Indeed, some have gone so far as to argue that GCs should be removed from the control of corporate managers and report only to an independent committee of the company’s board[82] to ensure true independence. …

[In] jurisdictions where the status of in-house lawyers has traditionally been even more tenuous than in the United States, resistance to the professionalism claims of internal counsel has been even stronger. Despite years of lobbying, in-house lawyers have still not been able to convince the European Court of Justice and other regulatory authorities that they are entitled to the attorney-client privilege with respect to discussions with their corporate employers. At the core of this decision is a fundamental doubt about whether employed lawyers can ever truly be independent.”

Legal scholars are suggesting that the growing integration of in-house lawyers with business leaders has threatened to turn the in-house lawyer into just another “consultant” who values the “appearance of independence” as opposed to any real commitment to public purposes or detachment from client aims.[83]

These are large and difficult questions (which require continued empirical research on the changing role of internal counsel in the United States and around the world),[84] however, for the purposes of this article, we can recognize that hierarchical and cultural pressures are especially pronounced if the business partners that in-house lawyers work with closely also have the authority to terminate the General Counsel or lawyer. Although a General Counsel may be formally appointed by the board of directors, in reality it is recognized that his or her tenure is usually dependent on his or her relationship with the CEO.[85] To establish good governance, trust and support – although ultimately a CEO decision – the Board should be involved in the selection of the General Counsel. To provide the appropriate support (tone from the top) of the General Counsel’s position and independence, “the Board plays an important role by providing checks and balances on the reasoning behind a General Counsel’s hiring or termination”.[86]

The GC’s client actually is the corporation—oftentimes acting through the board of directors. The client is not management, not the CEO, and not the executive officers. When I talk to groups of aspiring general counsels, [I tell them] that the hardest conversation you’ll ever have with the CEO is when you tell the CEO that [he or she] is not your client… the board is. 

–  Bob Bostrom, SVP, GC & Corporate Secretary, Abercrombie & Fitch[87]

In-house lawyers indeed face the risk of losing their job as a result of acting in the best interest of their corporate entity (the client) in the face of disagreement with their immediate supervisor, or the CFO and executive officers, the CEO, or even the Board of Directors – each of whom “sometimes exerts ‘ownership’ over” the corporate lawyer or General Counsel.[88]

Unfortunately, there is an increasing amount of evidence – experimental and historical – that many people may fail to rise above their ethical circumstances, in particular when people are under great strain[89] and institutional structures may encourage inappropriate corporate behaviour (i.e. Volkswagen DieselGate, GM faulty ignition switch, Wells Fargo bank scandal),[90] people are more likely to act badly then to act well. [91] In these circumstances, according to some studies a lawyer’s “own moral compass” may appear to ‘disappear into a smog of expediency, rationalisation, wilful blindness and slavish obedience’ to the client; one in which self-deception may be bought about by self-interest.[92] Some research in behavioral economics suggests certain basic cognitive biases that may discourage lawyers from detecting or acting upon management misconduct.[93] To be clear, “the point is not that lawyers are pervasively co-opted or immoral. The point is only that lawyers have both economic incentives and cognitive biases that may systematically incline some lawyers to potentially shut their eyes to instances of client misconduct”.[94]

The sociologist Diane Vaughan coined the phrase the normalization of deviance to describe a cultural drift in which circumstances classified as “not okay” are slowly reclassified as “okay.” … You cannot unconsciously install a “defeat device” into hundreds of thousands of cars. You need to be sneaky, and thus deliberate.   

– Jerry Useem, What Was Volkswagen Thinking? On the origins of corporate evil – and idiocy[95]

Yes, In-house counsel are professionally and ethically required to respect and facilitate the rule of law, particularly when advising clients. However, as emphasized by Professor Woolley, although lawyers may have special duties, “they aren’t special – they are ordinary people, likely to respond in the ways ordinary people do to the circumstances in which they find themselves”. As such, there should be a recognition by corporations and regulators that some lawyers may potentially only fulfill these professional duties when circumstances “at least somewhat support them doing so” [96] – in particular there must be a strong culture of integrity, and appropriate protection and support from the Board of Directors and executive corporate leadership.

The toughest case – and ultimate test of the General Counsel’s character and professionalism – is when both the CEO and the Board overlook (or encourage) certain types of misconduct or governance issues, and/or ignore a General Counsel’s report of a serious ‘questionable’ matter, ethical issue, and/or illegality.[97] Looking at Volkswagen and its most recent DieselGate scandal (i.e. millions of ‘defeat devices’ installed in vehicles to illegally hide emissions higher than allowed by law) as an example  –  the leadership and toxic corporate culture was such a powerful force that it caused people to make decisions that were not in the companies’ best interests.[98] A culture that punishes internal efforts to do the right thing will remain a culture prone to cheating and fraud:[99]

“VW is not alone. Its shameful scandal follows on the heels of the judgment against GM for faulty ignition switches, resulting in more than a hundred deaths. Both join the ranks of numerous corporations and government agencies that have cheated to hide egregious failures or to pursue short term gains …

If any good is to come out of this latest scandal at VW, it will be a clear lesson to the corporate world, and to the public sector, that internal dissent must be valued and encouraged. Not hidden. Not punished. The short term financial rewards of silencing dissent will eventually become a corporate disaster. Eleven million cars to recall and $7.5 billion to remediate the damage just for starters. A 20% loss of share value overnight and dropping. A brand that will be tarnished for a decade. Criminal prosecutions of executives, managers and software engineers who colluded.

The time has come for boards, CEOs and executives throughout the corporate world to recognize the inestimable value of a culture in which employees will not follow orders if those orders will result in harm; that they will clearly and professionally help management understand the risks they may be underestimating, rationalizing or dismissing, and they will take a stand if management tries to push them over a line that should not be crossed.

Once the value of such a culture is recognized, the challenge becomes how to create it. This is not as hopeless as one might think. There is a competency called “Intelligent Disobedience” that can be baked into the culture and duly rewarded. It is the antidote to, “I was just following orders.” Such a culture will not spontaneously emerge, but it can be seeded, nurtured and brought to life.

Everyone up and down the organizational chart must understand personal accountability and how to intelligently and safely exercise it. Needing to go outside the organization to blow the whistle in order to correct internal wrongs represents an utter failure of boards and leadership. Whistle-blower protections are necessary, but a culture that values constructive dissent and intelligent disobedience pre-empts the need for whistle-blowing. … the time to redesign the culture is now.”

When a lawyer fears a client’s disapproval (or wants the client’s approval), where the lawyer works in an environment in which certain kinds of misconduct become normalized or excused, where conformity is valued, or, conversely, creativity in “interpreting” rules is, it should not be a surprise that some lawyers do not fully act to prevent misconduct, even where professional obligations should lead them to do so?

– Professor Alice Woolley, The Volkswagen Scandal: When We Ask, ‘Where Were the Lawyers?’ Do We Ask the Wrong Question? [100]

Very few people go into leadership roles to cheat or act inappropriately, yet leaders – like most people – have the capacity for decisions they may subsequently regret unless they are able to stay grounded.[101] To stay grounded executives must prepare themselves to confront enormous complexities and pressures.

First and foremost, remember that no matter what issue is ultimately thrown into your path by forces outside your control, there is always one thing you can absolutely control: your response to the situation. You always have a choice.[102]

Second, corporate culture is an important consideration for Boards and audit committees, touching and influencing as it does every aspect of a company (from strategy to compliance),[103] and should be a critical item on every Board’s agenda.[104]  Corporate culture is the single most important force for preventing misconduct (and withstanding regulatory scrutiny) – and this includes the culture of the in-house legal department:[105]

“Ethics has everything to do with management. Rarely do the character flaws of a lone actor fully explain corporate misconduct. More typically, unethical business practice involves the tacit, if not explicit, cooperation of others and reflects the values, attitudes, beliefs, language, and behavioral patterns that define an organization’s operating culture. Ethics, then, is as much an organizational as a personal issue. Managers who fail to provide proper leadership and to institute systems that facilitate ethical conduct share responsibility with those who conceive, execute, and knowingly benefit from corporate misdeeds.”

To be effective, the culture and ‘tone for the top’ must clearly state and/or reflect the organization’s values of ethics and integrity. To reinforce those behaviours, the company’s organizational ecosystem must address the underlying conditions that are usually present when personnel – executives, managers, in-house lawyers, front line staff – engage in illegal or unethical acts, by: (a) ensuring that the organization is not creating pressures or incentives that influence personnel to act inappropriately; (b) making sure business processes and financial controls minimize opportunities for inappropriate behavior; and (c) preventing personnel from finding ways to rationalize breaking the rules. This line of thinking borrows from the classic conception of the “fraud or Compromise triangle,” which identifies three elements necessary as precursors to fraud – which in this article includes misconduct generally – as: opportunity, rationalization, and pressure (motive).[106] It all starts with inspiring a shift in mindset, and moving away from the sentiment of “that’s just how things are around here” to “this is how we are going to think and act from now on”.[107]

And for the in-house legal departments that starts with the General Counsel. Rules alone are not enough. Instead, it should be recognized that “all systems and organizations that seek to inculcate absolutes are dependent upon the moral courage of those within their systems and organizations. Nurturing individual strength for that fortitude becomes a critical function.”[108] The General Counsel should make it clear that legal department lawyers are expected to bring any concerns to his or her attention on a timely basis—even where those concerns involve managers or senior executives—and should communicate the same message to external counsel. If an issue can be surfaced early, the relevant personnel can usually be re-directed into a more appropriate course, or steps can be taken to prevent or remediate any improper actions before they become unmanageable—for example, by bringing senior authority in the organization into the loop to exercise control over potentially wayward executives, managers or front line personnel, or by promptly self-reporting any actual violation before a regulator or prosecutor discovers it and takes appropriate action.[109]

Ensuring robust compliance and governance frameworks, policies and protocols are in place and, importantly are being enforced, is one step in managing risk.  However, it must go further than that, companies should strive to move beyond a culture of “legal compliance” to one in which the goal is to create a “legally astute organization” where legal and business considerations are integrated at every level of the organization.[110] Compliance, governance and ethics dovetail into one another as business critical considerations.  But they are not one and the same and should not be confused as such.  An organization’s ethical culture must be habitual, extending beyond the boundaries of compliance and governance frameworks and policies.[111]

Executives, managers, and down the line to in-house lawyers who work hand-in-hand with their business partners to create realizable value, marshal resources, and manage risk (both business and legal), must guard against being co-opted into inappropriate decisions and conduct (whether by commission or omission). Each individual in the organization has a role to play, but it must be recognized that ultimately in-house lawyers and their business partners are more likely to be influenced by what their leaders (Board, CEO, General Counsel, etc.) actually do, whom they hire and promote, whom and how they compensate, criticize or praise, than by their words alone. For example, are personnel who identify and raise issues ‘up the ladder’ punished and shunned or praised for their courage?[112]

Third, creating a system of routine access for the General Counsel and Board of Directors can be invaluable if done in a manner that is perceived and supported as good corporate governance by the CEO and executive leadership team. At a minimum, the General Counsel should meet routinely with the Board of Directors and Board committees like the executive, audit, and compliance committees. Where such meetings are part of a regularly scheduled process, they are less likely to be seen by the executive leadership team as end running the chain of command, and more likely to be seen as simply a part of good corporate governance.[113]

At the end of the day, the CEO is central to the successful resolution of the partner-guardian tension. Beyond unquestioned personal integrity, the CEO must want to create a high performance– high integrity culture[114] where most people do the right thing – constraining inappropriate internal pressures for income, cash, and stock price increases, and inappropriate external pressures from corrupt markets, demanding customers, and unscrupulous competitors. Executives, managers, in-house counsel, and personnel generally should act in an ethical way not just because they fear being caught by the company compliance system, but because the business’s reputation for integrity is strong, company values are widely shared, and doing the right thing is supported by the Board of Directors and executive leadership.[115]

The Law and In-house Counsel

 This article is general by nature. It is important that lawyers across jurisdictions (i.e. U.S., UK, Australia, Canada) are familiar with the rules and laws applicable to their home countries and applicable states or provinces.

The in-house lawyer is part of the hierarchy within the Corporation that starts with the Board of Directors and descends down through the CEO and the individual business and administrative heads of which the General Counsel is one.[116] The role of in-house counsel has become increasingly important and integral to the organization. They are part of the organization, working alongside business colleagues for a common goal. Yet unlike most colleagues, in-house counsel as lawyers are bound by ethical and professional obligations pursuant to their applicable Law Society’s Rules of Professional Conduct. The nature of this relationship makes the role for in-house counsel more challenging.[117]

The in-house lawyer’s deep involvement in the day-to-day business can lead to a higher level of accountability in ways not affecting lawyers in private practice.  For example, in-house lawyers are now more frequently in the crosshairs of regulators[118] and are expected to be “gatekeepers” whose job is, in part, to keep the company honest is ways that do not fall clearly within the rules of professional responsibility.  This requires a very delicate balancing act that external counsel is often immune.  Understanding that things “are different” for in-house lawyers provides a lens to consider the different ethics issues that must be considered day to day, and matter to matter.[119]

An important issue – and challenge – is the question of the General Counsel and their in-house lawyers’ independence. Is corporate counsel or external counsel more likely to have the independence to tell senior management or the CEO or the Board of Directors what they may not want to hear? Both lawyers are in the first instance officers of the court and bound by their Rules of Professional Conduct to maintain their independence.[120]

Whether General Counsel or other in-house lawyer is acting in their legal capacity or in a business capacity, the Rules of Professional Conduct apply to guide – and appropriately restrict – the in-house counsel’s conduct. The Canadian Federation of Law Societies Model Code of Professional Conduct and the Law Society of Upper Canada’s (Ontario) Rules of Professional Conduct pertaining to independence (and indeed to all other matters) carve out no exemption for in-house counsel.

In-house counsel “are regarded by the law as in every respect in the same position as those who practice on their own account. The only difference is that they act for one client only [the corporation], and not for several clients”. In-house counsel “are subject to the same duties to their clients and to the court. They must respect the same confidences. They and their clients have the same privileges”.[121] In Canada, and most western jurisdictions (notably the UK, and U.S.),[122] a lawyer’s law society obligations – professional conduct rules – although certainly not perfect, set out guidelines and guidance in respect to in-house lawyer duties. Looking at the Law Society of Upper Canada’s Rules of Professional Conduct, for example, lawyers in Ontario have the following duties:[123]

• Integrity – A lawyer has a duty to carry on the practice of law and discharge all responsibilities to the client and the public honourably and with integrity”.[124] A lawyer has special responsibilities by virtue of the privileges afforded the legal profession and the important role it plays in a free and democratic society and in the administration of justice.[125]
• Honesty and candour – When advising the client, a lawyer shall be honest and candid.[126] “The advice must be open and undisguised and must clearly disclose what the lawyer honestly thinks about the merits and probable results”.[127] In-house counsel act for the organization and owe professional obligations to the organization, not to any executive or other corporate officer, employee, agent or representative of the company.[128] The organization is the client and “has a legal personality distinct from its shareholders, officers, directors, and employees”.[129]
• Avoid conflict of interest – A lawyer shall avoid conflicts of interest with their client[130] (i.e. the existence of a substantial risk that a lawyer’s loyalty to or representation of the corporate client would be materially or adversely affected).[131]
• Avoid “knowing” assistance re dishonesty etc. – A lawyer shall not knowingly assist in or encourage any dishonesty, fraud, crime, or illegal conduct or instruct a client or any other person on how to violate the law and avoid punishment.[132] This applies whether the lawyer’s knowledge is actual or in the form of wilful blindness or recklessness.[133]
• Avoid “ought to know” facilitation re dishonesty etc. – A lawyer shall not act or do anything or omit to do anything in circumstances where he or she ought to know that, by acting, doing the thing or omitting to do the thing, he or she is being used by the corporate client, by a person associated with a client, or by any other person to facilitate dishonesty, fraud, crime or illegal conduct.[134]
• Up-the-ladder reporting – In circumstances where in-house counsel find themselves aware of information regarding wrongdoing by the organization (i.e. fraud and other corporate misconduct), in-house counsel must disclose this material information to the organization. This is initiated when a lawyer “knows” that the organization “has acted, is acting, or intends to act dishonestly, fraudulently, criminally, or illegally”. Includes acts of omission likely to result in substantial harm to the organization.[135] It is in the organization’s and public’s interest that organizations do not violate the law – in-house counsel (and in particular General Counsel and Chief Legal Officers) must guide organizations to act in ways that are legal, ethical, reputable, and consistent with the organization’s responsibilities to its constituents and to the public”.[136]
  • First step on ladder: “advise the person from whom the lawyer takes instructions and the chief legal officer, or both the chief legal officer and the chief executive officer, that the conduct is, was or would be dishonest, fraudulent, criminal, or illegal and should be stopped”.
  • Second step on ladder: “if necessary because the person from whom the lawyer takes instructions, the chief legal officer or the chief executive officer refuses to cause the conduct to be stopped, advise progressively the next highest persons or groups, including ultimately, the board of directors, the board of trustees, or the appropriate committee of the board, that the conduct was, is or would be dishonest, fraudulent, criminal, or illegal and should be stopped”.
  • Third step on ladder – “withdrawal”: “if the organization, despite the lawyer’s advice, continues with or intends to pursue the wrongful conduct, withdraw from acting in the matter in accordance with rules in Section 3.7”.[137] For in-house counsel this effectively means resigning from his or her position with the organization, as opposed to simply withdrawing from acting in a particular matter, and determining whether it is: (a) feasible and appropriate to give any advice in writing,[138] and (b) required and justified to disclose confidential information to the appropriate authorities (the general rule of strict confidence for client information is subject to only a few exceptions in Canada – i.e. by law, order of a tribunal of competent jurisdiction, client authorization, imminent physical harm).[139]

Reporting early can mitigate the damage—but to whom to report can then be a serious issue. If senior management is implicated, up-the-ladder reporting might be unsuccessful.

– Julie Sobowale, CBA National[140]

An important consideration for an in-house legal department is to implement a procedures manual, guidelines, and/or policies that support and enhance the independence of corporate counsel and compliance with the Law Society’s Rules of Professional Conduct in each jurisdiction the organization and its legal department operates – and to recognize (or at least consider) the importance of environmental safeguards, including, for example, such matters as:

• Adherence to the applicable jurisdiction’s Rules of Professional Conduct for lawyers. In particular, (a) in-house lawyers’ professional and ethical duties and responsibilities owed to the corporation (as the client); and (b) exercise of independent professional judgment by in-house on behalf of the corporation.
• Independence and reporting (i.e. ‘up the ladder’ reporting).
• Separate identifiable legal department and office space, with its own set of files and administrative staff and support system, with lines of supervision and control by senior lawyers.
• Persons responsible for employment review and promotion of legal department personnel should be managing lawyers and operational managers within the legal department.

This mapping of the ‘moral compass’ of in-house lawyers shows that ethicality is associated with individual and professional notions of the in-house role but also with team orientations and the broader organisational environment.

– Richard Moorhead, Ethical Leadership for In-House Lawyers Initiative[141]

It should be noted that a managing lawyer within a legal department may have the same responsibility for the operation as would a partner in a law firm. Even without an ethics rule, depending on the jurisdiction, principles of civil liability may create a situation whereby a supervising or managing lawyer may be liable for the ‘negligence’ or other ethical misconduct of a subordinate or reporting lawyer.

When companies run afoul of securities laws or criminal laws, you will often see persons in authority ask “Where were the lawyers?”. In-house counsel are under the microscope and regulators in some jurisdictions expect such lawyers to act as “gatekeepers” to prevent fraud and misconduct by corporate organizations.  The bottom-line is that the General Counsel and their in-house lawyers must not be willfully blind, or otherwise assist in a crime or fraud or similar misconduct, and may be required to act to take steps to prevent bodily harm (i.e. Canada) or financial harm (i.e. U.S.). Depending upon the jurisdiction (U.S.,[142] Canada,[143] UK,[144] Australia,[145] etc.), if there is a legislative disclosure requirement then this must be done and the organization advised accordingly.[146] In most western jurisdictions, in particular in the U.S. and Canada, the lawyer’s Law Society discipline jurisdiction does not oust the power of Regulators to regulate lawyers conduct that is also subject to an applicable regulatory scheme (i.e. securities industry).[147]

General Counsel and any other in-house lawyers should review and consider if appropriate to document or memorialize any actions taken to comply with their (or the organization’s) obligations or expectations. This may be particularly important in the event there is some reason the question is asked by persons in authority: “Where were the lawyers?”

As Enron, Volkswagen’s DieselGate, and other corporate scandals illustrate, corruption can originate at the top and create a widespread culture of non-compliance and dishonesty. For most organizations the risk is not at this senior level, but rather associated with employees, customers and third parties.[148] In either event highly profit-driven businesses often need and want lawyers who can provide a “corporate conscience.” In that capacity, lawyers can help clients evaluate short-term economic objectives in light of long-term concerns that include maintaining a reputation for corporate responsibility, complying with the law and doing the “right thing”, and managerial integrity.[149]

It’s not very difficult to be a decision-maker – we all make decisions every day. The tricky part is to make the right decision.

– Gilbert Probst, Dean of Global Leadership Fellows Program[150]

Conclusion

In many corporate scandals where the question arises ‘Where were the lawyers?”, it is a case of an in-house lawyer appearing to lose sight of who the client was, where their ethical obligations lay, what their ultimate ethical obligations were, and how becoming too close to their corporate client’s executives and/or employees may expose an in-house lawyer to conflicting interests.

The lawyer had either misunderstood, overlooked or blatantly chose to disregard that the organization was the client, the legal duty was to the corporation not the executive or employee, the duty to the Court over rode the duty to the organization, and any conversation with another executive or member of personnel can never be “off the record”.[151]

Commentators and General Counsel have stressed that it is about building relationships not necessarily friendships for in-house lawyers – ensuring objectivity is not compromised and that there is not “blindness about the overarching interests involved”.   To do otherwise, potentially exposes in-house lawyers to conflicts as well as opening up opportunities for business colleagues to take liberties without scrutiny.[152]

The basic capability that all legal leaders must possess: the courage to resist and speak out against illegal, inappropriate or unethical behaviour, even where that will require them to go against their friends and colleagues.

– Bjarne P. Tellmann, General Counsel and Chief Legal Officer, Pearson plc[153]

It is important for General Counsel or the Chief Legal Officer to ensure its department is setting the right legal, ethical and cultural tone. In this respect, it has been reported that a German Regulator has specifically criticised the Deutsche Bank’s Board of Directors for retaining its General Counsel – suggesting this signalled its failure to effect cultural change in the wake of the LIBOR rate-fixing scandal.[154]

It is not enough for corporations simply to state their corporate values; their leaders must practice them and hold accountable those who fail to act in accordance with them. As former General Counsel Benjamin Heineman explains:[155]

“The stirring call for performance with integrity at the large company meeting can be eroded by the cynical comment an executive makes at a smaller meeting, by the winks and nods that implicitly sanction improprieties, by personal actions (dishonesty, lack of candor) that contradicts company values.”

“Creative compliance,” defined as “complying with the letter of the law but defeating its spirit and purpose,” as well as capitalizing on unintended legal loopholes, rub against the grain of a legally astute culture. Even if an action is not inherently unlawful, it may make subsequent unlawful action more likely to occur.[156]  In the wrong company – as noted by law professor Timothy Terrell – the General Counsel “has one foot planted firmly in the shifting treacherous terrain of the law, and [may have] the other planted just as firmly in the oozing swamp of business.”[157]

Instead of seeing themselves as “independent professionals,”it has been argued that the growing integration of in-house lawyers into cross functional project teams designed to work more closely with business leaders – without the appropriate environmental safeguards and culture – threatens to turn the in-house lawyer into just another “consultant” who values the “appearance of independence” as opposed to any real commitment.[158]

Corporate scandals demonstrate that General Counsel and in-house lawyers who inappropriately act as appeasers and enablers fail to serve their corporate client.[159] There may be short-term gain, however, it is often followed by severe long-term pain for all involved.[160] These can be difficult issues – be attuned to what is ethical as well as what is legal. If in doubt, seek advice.

It’s important to remember who you are and where you’re from. Then you fight like hell to be good stewards.

– Jim Metcalf, then President of USG Corporation[161]

Ethics is one of the most challenging issues facing General Counsel and their team of in-house lawyers.   The 2017 Association of Corporate Counsel’s Chief Legal Officers Survey identifies ethics and compliance as the number one concern.[162] Corporate clients require “courage” from their General Counsel and legal team – in this respect, “no lawyer should turn to [an] in-house practice unless he or she has the capability and willingness to push back against unethical behaviour”[163] –  an in-house lawyer that is not prepared to be a “vocal advocate for zero tolerance” becomes part of the problem.[164] However, leadership and support from the Board of Directors (and ideally the CEO and senior management) is key to the independence of the General Counsel and his or her legal team, and their success on behalf of the corporation as partners and guardians.[165]

Eric Sigurdson

 

Endnotes:

[1] United States: Michael Winship, In a Time of Madness, Sally Yates Is a Profile in Courage: fired acting attorney general proved this week that there are still a few in Washington who believe in truth and law, Salon, May 13, 2017;  Catherine Clifford, How Sally Yates’ life and career formed the principles that just got her fired, CNBC, January 31, 2017 (“Yates questioned the legality of President Donald Trump’s immigration ban barring travelers from seven Muslim-majority countries — and the move got her fired.”); Rebecca Savransky, Loretta Lynch praises Sally Yates for ‘courageous leadership’, The Hill, January 31, 2017:

“Her [acting Attorney General Sally Yates] courageous leadership embodies the highest traditions of the Department of Justice, whose first duty is always to the American people, and to the Constitution that protects our rights and safeguards our liberties.”

Canada: Roderick MacDonell, The Whistleblower, CBA National, November-December 2013 (“Edgar Schmidt sued his own ministry over its process for vetting legislation, exposing the ethical conundrums that government lawyers face”); Values and Ethics Code of the Department of Justice (Federal Government), Justice.gc.ca:

Objectives

The Code outlines the values and expected behaviours that guide public servants in the Department in all activities related to their professional duties. By committing to these values and adhering to the expected behaviours, public servants strengthen the ethical culture of the public sector and contribute to public confidence in the integrity of all public institutions.

The Code provides guidance for common situations involving our work at the Department. In all circumstances, each employee is expected to adhere to the highest ethical standards that are to be expected from a public servant. …

3. Integrity

Integrity is the cornerstone of good governance and democracy. By upholding the highest ethical standards, public servants conserve and enhance public confidence in the honesty, fairness and impartiality of the federal public sector.

Expected Behaviours

Public servants shall serve the public interest by:

3.1 Acting at all times with integrity and in a manner that will bear the closest public scrutiny, an obligation that may not be fully satisfied by simply acting within the law.

[2] Paul D. Paton, Corporate Counsel as Corporate Conscience: Ethics and Integrity in the Post-Enron Era, Canadian Bar Review, Vol. 84, page 533, 2006. Also see: ; Constance Bagley, Mark Roellig, Gianmarco Massameno, Who Let the Lawyers Out: Reconstructing the Role of the Chief Legal Officer and the Corporate Client in a Globalizing World, U. of Pennsylvania Journal of Business Law, Vol. 18:2, page 419, 2016; David B.Wilkins, The In-House Counsel Movement, Metrics of Change, Legal Business World, January 20, 2017; Martin Meredith and Sascha Hindmarch, Keeping the ‘House’ Ethically ‘Clean’, Law Society of South Australia, October 2014; Ben Heineman Jr., The Inside Counsel Revolution: Resolving the Partner-Guardian Tension, 2016; Ben Heineman, Jr., Inside the in-house counsel revolution, The Lawyer Daily, April 25, 2017.

[3] Yin Wilczek, Top Abercrombie Lawyer Sounds Off on VW, Saying CEO is Not the Client, Bloomberg, May 11, 2017.

[4] Paul D. Paton, Corporate Counsel as Corporate Conscience: Ethics and Integrity in the Post-Enron Era, Canadian Bar Review, Vol. 84, page 533, 2006.

[5] Bjarne Tellman, The Importance of Courage for In-House Counsel, Barker Gilmore.com, May 30, 2017; Bjarne Tellman, Building an Outstanding Legal Team: Battle-Tested Strategies from a General Counsel, April 2017.

[6] Cheryl Foy, Defining the boundaries of in-house counsel, Canadian Lawyer, January 9, 2012.

[7] Felicity Nelson, Triggs: In-house counsel should be corporate world’s ‘moral compass’, Lawyers Weekly (Australia), March 5, 2015.

[8] For example: Canada – Federation of Law Societies of Canada, Model Code of Professional Conduct; Law Society of Upper Canada, Rules of Professional Conduct (Ontario); United States – American Bar Association, Model Rules of Professional Conduct ; United Kingdom – Solicitors Regulation Act, SRA Code of Conduct 2011; Australia – Law Council of Australia, Australian Solicitors’ Conduct Rules (August 2015) –  in place in Victoria, New South Wales, Queensland, South Australia and the Australian Capital Territory, with some minor variations between States.

[9] Felicity Nelson, Triggs: In-house counsel should be corporate world’s ‘moral compass’, Lawyers Weekly (Australia), March 5, 2015.

[10] Felicity Nelson, Triggs: In-house counsel should be corporate world’s ‘moral compass’, Lawyers Weekly (Australia), March 5, 2015.

[11] Ben Heineman, Heineman on Wells Fargo: Where Were the Lawyers?, Harvard Kennedy School: Belfer Center for Science and International Affairs, October 12, 2016; Paul Lippe, Volkswagen: Where were the lawyers?, ABA Journal, October 13, 2015; David Mowry, Really, VW? Part One: the big question of the Volkswagen scandal – where were the lawyers?, Above the Law, September 30, 2015; Ashby Jones, Where Were the Lawyers?, Wall Street Journal, January 2, 2007; Alice Woolley, The Volkswagen Scandal: When We Ask, ‘Where Were the Lawyers?’ Do We Ask the Wrong Question?, Slaw, September 30, 2015; Constance Bagley, Mark Roellig, Gianmarco Massameno, Who Let the Lawyers Out: Reconstructing the Role of the Chief Legal Officer and the Corporate Client in a Globalizing World, U. of Pennsylvania Journal of Business Law, Vol. 18:2, page 419, 2016 (“the flagrant disregard for the law by multiple companies across diverse industries prompted Judge Sporkin to ask, “Where were the lawyers?”).

[12] Martin Meredith and Sascha Hindmarch, Keeping the ‘House’ Ethically ‘Clean’, Law Society of South Australia, October 2014. For example: It is important for General Counsel or the Chief Legal Officer to ensure its department is setting the right legal, ethical and cultural tone. In this respect, it has been reported that a German Regulator has specifically criticised the Deutsche Bank Board for retaining its General Counsel – suggesting this signalled its failure to effect cultural change in the wake of the LIBOR rate-fixing scandal – see: Alex Newman, Deutsche Bank GC Criticised by German Banking Regulator, Legal Week, January 7, 2014.

[13] Cheryl Foy, Defining the boundaries of in-house counsel, Canadian Lawyer, January 9, 2012.

[14] Solicitors Regulation Authority v Alastair Brett (unreported, Solicitors Disciplinary Tribunal, Case No. 11157-2013, 17 January 2014); Alastair Brett v. Solicitors Regulation Authority (SRA), [2014] EWHC 2974 (Admin appeal):

Summary of judgment – Mr Justice Wilkie allowed the appeal, but only to the extent of quashing the decision of the Solicitor’s Disciplinary Tribunal (SDT) that he was guilty of a breach of Rule 11.01 by “knowingly” misleading the court and substituting for it a finding that he was guilty of Rule 11.01 by “recklessly” misleading the court. He rejected his appeal against the finding of the SDT that he acted in breach of Rule 1.02 by failing to act with integrity.

Note: Phone hacking scandal in the United Kingdom. Journalists at British newspaper – News of the World and other newspapers published by News International – are accused of making payments to police and hacking into the phones of celebrities, law makers, royalty, murder victims and other figures in the news. See: UK Phone Hacking Scandal Fast Facts, CNN Library, April 27, 2017; Phone-hacking trial explained, BBC News, June 25, 2014.

[15] Sue Reisinger, VW In-House Lawyer Implicated, 6 Others Indicted by DOJ, Corporate Counsel, January 11, 2017:

“Volkswagen Group today agreed to plead guilty to three felonies over its emissions cheating scandal, and federal prosecutors said six former VW department heads were indicted as the investigation against individuals continues.

It remains to be seen if the investigation will eventually reach into the C-suite or into the in-house legal department, where an unidentified attorney was implicated in the scandal.

A statement of facts attached to the plea deal identifies an in-house counsel, cited as “Attorney A,” who was “the in-house attorney principally responsible for providing legal advice in connection with VW AG’s response to U.S. emissions issues.”

The attorney took part in several meetings with executives about the issues and discussed a litigation hold placed on documents by the U.S. legal department at VW Group of America.

According to the statement, after several meetings VW employees became aware that “there had been a recommendation from a VW AG attorney to delete documents related to the U.S. emissions issue.” Subsequently about 40 employees deleted thousands of documents, the statement says. …

U.S. Attorney General Loretta Lynch said at a press conference that VW is pleading guilty to obstruction of justice, importation of goods by false statements, and conspiracy to: defraud the United States, commit wire fraud, and violate the Clean Air Act.

VW will be placed on three years’ probation and retain an independent monitor to oversee its ethics and compliance program. It also agreed to fully cooperate with the ongoing investigation into individuals …”.

[16] Jerry Hirsch, GM’s legal team targeted in federal probe of faulty ignition switches, Los Angeles Times, August 22, 2014 (“Department of Justice is investigating whether the legal department of General Motors Co. concealed evidence from safety regulators about defective ignition switches that have been linked to at least 13 deaths and more than 50 crashes”.); Richard L. Cassin, After GM: Can in-house lawyers survive?, The FCPA Blog, July 21, 2014:

“The allegations are prima facie awful. In-house lawyers defending wrongful death claims knew for eleven years that some GM vehicles had an ignition flaw that could cause accidents. They didn’t report the flaw internally or to regulators because they didn’t want to prejudice GM’s position in ongoing or future litigation.

The ignition flaw, GM has now acknowledged, eventually resulted in 13 people being killed in 54 accidents. The company was forced to recall about 30 million vehicles at a cost of more than $2.5 billion.

Of the 15 employees GM has fired because of the ignition hazard, half were in-house lawyers or investigators working for the law department.”

Also see, Alan Salpeter, Emily Newhouse Dillingham, Lessons counsel should learn from the GM ignition switch failure, Inside Counsel, May 11, 2015:

“According to the Valukas report, GM’s in-house lawyers first became aware of the ignition switch issue in 2004. Although they began reviewing and settling lawsuits, they did not elevate the issue to the general counsel until 2013. … In-house legal teams should learn from GM’s failure. Whether your company’s issue is safety or compliance with a federal or state regulation, create the right culture. Make sure one individual within your legal department takes ownership of that issue. That person must act with a sense of urgency. Ensure that the designated inside lawyer has the resources to manage the problem. Make sure that that individual knows when and how to escalate the issue within the company.”

[17] Alex Newman, Deutsche Bank GC Criticised by German Banking Regulator, Legal Week, January 7, 2014 (“Germany’s financial regulatory body has singled out Deutsche Bank general counsel Richard Walker in a report urging the bank to make senior management changes in the wake of the Libor scandal”.); David Enrich, Jenny Strasburg and Eyk Henning, Germany blasts Deutsche Bank executives over culture, Wall Street Journal, July 16, 2015:

“German regulators accused a half-dozen current Deutsche Bank executives of failing to stop or tell regulators about years of attempted market manipulation, according to a confidential report reviewed by The Wall Street Journal that portrays the German bank as suffering from a badly broken corporate culture. …

Two of the current executives reprimanded in the letter, general counsel Richard Walker and chief risk officer Stuart Lewis, hold senior global roles in which they are responsible for ensuring that Deutsche Bank complies with the law and avoids excessive risk-taking that could cause losses or reputational damage.

BaFin accused Messrs Walker and Lewis of failing to take seriously information requests from US regulators when they were investigating manipulation of key interest-rate benchmarks, and said they sometimes misled BaFin about regulatory investigations or employees’ involvement in questionable behaviour.”

[18] Ben Heineman, Heineman on Wells Fargo: Where Were the Lawyers?, Harvard Kennedy School: Belfer Center for Science and International Affairs, October 12, 2016:

“So far, at least as far as I know, the Wells Fargo lawyers have not been the subject of investigation and analysis. But how can they not be? How can they not have been responsible, in some part, for fundamental failings in prevention and in the failures to respond swiftly and comprehensively when wrongdoing was detected years go? Wells Fargo indicated in July 2016, prior to the September settlement, that Jim Strother, Wells Fargo GC since 2003, would leave at the end of this year under the bank’s mandatory retirement policy. …

This investigation should go back to the beginning, when the fraudulent accounts were first reported inside Wells Fargo, and do a complete assessment of causes and the accountability of top management, including the lawyers, in failing to create the proper culture, systems and processes for addressing blatantly improper actions by thousands of Wells Fargo employees under a compensation system which rewarded “new” accounts and which lacked checks and balances to prevent self-aggrandizing fraud.

The investigation should avoid the failures of the Valukus investigation of General Motors Co.’s ignition-switch defect which blamed the GM bureaucracy but failed to inquire into the most important issue—the role of top management, including the general counsel, in preventing, detecting and responding much more swiftly to a long-standing problem before more than 100 people had died.”

Casey Sullivan, Why Didn’t Wells Fargo’s Legal Department Prevent the Account Fraud Scandal, In House, FindLaw Corporate Counsel Blog, April 11, 2017; Debra Cassens Weiss, Wells Fargo lawyers focused on managing risks rather than possible illegal pattern, report says, ABA Journal, April 10, 2017.

[19] Tom Brennan and Jessica Seah, GSK Case Raises China In-House Questions, American Lawyer, July 29, 2013; James M. Zimmerman and Cheryl Palmeri, Lessons Learned from the Glaxosmithkline bribery scandal, Lexology, August 5, 2013:

“Chinese authorities have detained GSK employees and medical personnel, including four senior Chinese GSK executives, in connection with the [bribery] scandal.  Among the detained executives is GSK’s Chinese legal director, Zhao Hongyan. …”

[20] Deborah L. Rhode and Paul D. Paton, Lawyers, Ethics and Enron, 8 Stan. J.L. Bus. & Fin. 9, 2002; Paul D. Paton, Corporate Counsel as Corporate Conscience: Ethics and Integrity in the Post-Enron Era, Canadian Bar Review, Vol. 84, page 533, 2006:

The Final Report of the Enron Bankruptcy Examiner, Neal Batson, excoriated Enron’s General Counsel James Derrick as having “rarely provided legal advice to Enron’s Board even when significant issues… came to his attention” and having “failed to educate himself adequately on the underlying facts or the applicable law to enable him to carry out his responsibilities as legal advisor.” …

In contrast, at least two Enron attorneys had serious concerns about the company’s financial conduct, but were stymied by other Enron lawyers or managers in efforts to respond. A case in point involves a September 2000 memo by an Enron North America attorney expressing concern about the possibility that “the financial books at Enron are being ‘cooked’ in order to eliminate a drag on earnings that would otherwise occur under fair value accounting.”

Enron accounting scandal: Enron was an energy, commodities and services company. It was based in Houston and was the sixth largest company in the United States. Through creative accounting, the CEO (Jeff Skilling) and former CEO (Ken Lay), with several key executives, lead the organization in its inflation of assets and profits, and concealing risky investments and financial losses.  Arthur Anderson was the accounting firm for Enron. The company’s fraudulent activities were made public by an internal whistleblower. The company filed for bankruptcy.  At that time, it was the largest corporate financial bankruptcy in the world.  Jeff Skilling and Ken Lay were convicted of conspiracy and fraud (note: Jeff Skilling was sentenced to 24 years in prison, reduced on appeal to 10 years. Ken Lay died prior to sentencing. Two other executives received sentences of 6 and 7 years).  Shareholders lost $74 billion, and employees lost pensions worth billions of dollars.  See, Enron Fast Facts, CNN, April 27, 2017; Enron Scandal: The Fall of a Wall Street Darling, Investopedia, December 2, 2016; Jean Folger, The Enron Collapse: A Look Back, Investopedia, November 30, 2011. See, Enron Fast Facts, CNN, April 27, 2017; Enron Scandal: The Fall of a Wall Street Darling, Investopedia, December 2, 2016; Jean Folger, The Enron Collapse: A Look Back, Investopedia, November 30, 2011.

[21] Arthur Anderson dissolution: In 2001 Arthur Anderson was the external accounting firm for Enron (the sixth largest company in the United States). Arthur Anderson was a member of the ‘Big Five’ international accounting firm with over 85,000 employees.  Enron’s internal fraudulent activities (by its CEO and key executives) lead to Enron’s shareholders losing $74 billion, and its employees losing their pensions worth billions of dollars.  Although only a small number of Arthur Anderson’s employees were associated with the Enron scandal, Arthur Anderson as an international accounting organization collapsed and all of its 85,000 employees lost their jobs.  See, Chris Isidore and Krysten Crawford, Andersen Conviction Overturned, CNN Money, May 31, 2005; Arthur Andersen Reversed and Remanded, The Economist, June 2, 2005.

[22] Professor Steven L. Schwarcz, The role of lawyers in the global financial crisis, Scholarship.law.duke.edu, 2010 (“lawyers may have ‘systematic opportunities to detect, prevent, and/or alert the public about risky corporate conduct or fraud’”); Sarah Kellogg, Financial Crisis: Where Were the Lawyers?, Washington Lawyer, January 2010; William V. Rapp, The lawyers and the meltdown: The role of lawyers in the current financial crisis (2010), in Suk-Joong Kim, Michael D. Mckenzie (ed.), International Banking in the New Era: Post-Crisis Challenges and Opportunities (International Finance Review, Vol. 11, pages 135-164); Brian E. Berger, The Professional Responsibility of Lawyers and the Financial Crisis, Developments in Banking Law, Vol. 31, 2011-2012. Also see, for example: Terry Carter, Will those who led the financial system into crisis ever face charges?, ABA Journal, February 1, 2016:

“The Financial Crisis Inquiry Report, released in 2011, was particularly pointed in its criticism of Wall Street, which it found had taken advantage of unprepared regulatory agencies that had been methodically defanged through deregulation over several years. The report noted a term coined on Wall Street that captured the carefree wheeling and dealing in the run-up to the meltdown: “IBGYBG”—”I’ll be gone, you’ll be gone.” The term, the report states, “referred to deals that brought in big fees up front while risking much larger losses in the future.”

[23] Martin Meredith and Sascha Hindmarch, Keeping the ‘House’ Ethically ‘Clean’, Law Society of South Australia, October 2014.

[24] Ben Heineman Jr., The Inside Counsel Revolution: Resolving the Partner-Guardian Tension, 2016; Ben Heineman, Jr., Inside the in-house counsel revolution, The Lawyer Daily, April 25, 2017; Ben Heineman, Jr., The Inside Counsel Revolution, Harvard Law School Forum on Corporate Governance and Financial Regulation, March 29, 2016.

[25] How the Role of General Counsel is Evolving Corporate Governance, Boardroom Resources, 2016; Ben Heineman Jr., The Inside Counsel Revolution: Resolving the Partner-Guardian Tension, 2016.

[26] 4 Ways Boards Can Improve Relations with the General Counsel, Boardroom Resources, 2016; Ben Heineman Jr., The Inside Counsel Revolution: Resolving the Partner-Guardian Tension, 2016.

[27] Jeannet, Jean-Pierre & Hein Schreuder, From Coal to Biotech: The transformation of DSM with business school support, 2015 (at pp 295 -296).

[28] David Dayen, Some top banking executives still see the law as an obstacle rather than a boundary, Business Insider, April 11, 2017. See: Ivy Walker, Ethikos Classic: Following the Boss’s Orders Might Land You in Jail, Compliance and Ethics.org, May 23, 2017 (reprinted from Classic Ethikos, The Journal of Practical Business Ethics, July/August 2016). Also see, Geoff Colvin, The Wells Fargo Scandal is now Reaching VW Proportions, Fortune, January 26, 2017; Richard Griffith, Wells Fargo – Lessons Learned, Impact on Integrity, May 2017; Matt Egan, Wells Fargo Scandal: Where was the board?, CNN, April 24, 2017; Jeff Spross, The agonizingly familiar problem with Wells Fargo’s board of directors, The Week, September 29, 2016; Gretchen Morgenson, By Taking the Money, Wells Fargo’s Board Seems to Recall Its Role, New York Times, September 27, 2016; Doron Levin, Volkswagen’s new CEO must tackle the ‘culture of arrogance’, Fortune, September 27, 2015; Jason Kirby, Volkswagen was undone by Wall Street-style arrogance, Canadian Business, September 24, 2015.

[29] Mr. Heineman refers to “lawyer-statesperson” because he wants “to connote the GC’s search, in a practical, real-world setting, for the right action of a corporation embedded in a broader community, for the right vision of business in society”. Also see, Constance Bagley, Mark Roellig, Gianmarco Massameno, Who Let the Lawyers Out: Reconstructing the Role of the Chief Legal Officer and the Corporate Client in a Globalizing World, U. of Pennsylvania Journal of Business Law, Vol. 18:2, page 419, 2016:

“In 1993, Yale Law School Dean Anthony Kronman warned that “the [American legal] profession now stands in danger of losing its soul.” His remedy is the lawyer-statesman ideal…”.

[30] Ben Heineman Jr., The Inside Counsel Revolution: Resolving the Partner-Guardian Tension, 2016; Ben Heineman, Jr., Inside the in-house counsel revolution, The Lawyer Daily, April 25, 2017; Ben Heineman, Jr., The Inside Counsel Revolution, Harvard Law School Forum on Corporate Governance and Financial Regulation, March 29, 2016; Benjamin W. Heineman Jr., The General Counsel as Lawyer-Statesman, Harvard Law School Forum on Corporate Governance and Financial Regulation, September 5, 2010.

[31] Eric Sigurdson, Global Populism: Corporate Strategy, Engagement & Leadership in 2017 – ‘the year of living dangerously’, Sigurdson Post, January 18, 2017:

“Today’s CEO and C-suite executive team – which excludes their General Counsel^[31] from a chair at the leadership table at their peril – must integrate ‘business-in-the-economy’ (i.e. commercial realities of products, markets, and competitors), public policy and ‘business-in-society’ perspectives (i.e. societal and political realities, legislation, regulations, investigation, enforcement and litigation). Globalization and the rise of populism is compelling corporate leadership to master difficult and complex matters of local and international jurisdiction and political impact, including the challenges of more diverse and unpredictable business situations and industry trends. Failing to do so could result in substantial corporate damage, if an organization leads in such a restricted manner (i.e. a “business of business is business” outlook) it will likely be blind to outcomes they should be able to anticipate, since they are not positioned to understand and encompass the full dimension of the risk and opportunity in its’ corporate activity. Leadership acumen on business-in-society issues is imperative in addressing fundamental corporate issues, from business strategy to compliance to ethical standards to risk management.”

Also see: Harvard Business Review, The ‘Business in Society’ Imperatives for CEOs, Global Advisors, December 20, 2016; Ian Davis, Business and Society: The biggest contract – building social issues into strategy, big business can recast the debate about its role, The Economist, May 26, 2005.

[32] Ben Heineman Jr., The Inside Counsel Revolution: Resolving the Partner-Guardian Tension, 2016; Ben Heineman, Jr., Inside the in-house counsel revolution, The Lawyer Daily, April 25, 2017; Ben Heineman, Jr., The Inside Counsel Revolution, Harvard Law School Forum on Corporate Governance and Financial Regulation, March 29, 2016; Benjamin W. Heineman Jr., The General Counsel as Lawyer-Statesman, Harvard Law School Forum on Corporate Governance and Financial Regulation, September 5, 2010.

[33] Constance Bagley, Mark Roellig, Gianmarco Massameno, Who Let the Lawyers Out: Reconstructing the Role of the Chief Legal Officer and the Corporate Client in a Globalizing World, U. of Pennsylvania Journal of Business Law, Vol. 18:2, page 419, 2016.

[34] Bob Glazer, The Biggest Lesson from Volkswagen: Culture Dictates Behaviour, Entrepreneur, January 8, 2016.

[35] Jorg Thierfelder, The Role of the General Counsel with the Board of Directors, GonZehnder.com, 2017; David B.Wilkins, The In-House Counsel Movement, Metrics of Change, Legal Business World, January 20, 2017 – “the overwhelming majority—almost 90 percent—of the GCs in our sample reported directly to the CEO”; Survey: The Rise of the GC Report 2016: From Legal Adviser to Strategic Adviser, NYSE Governance Services / BarkerGilmore Survey Report, www.nyse.com. Rees Morrison, Reporting upward of general counsel, General Counsel Metrics, Law Department Management Blog, March 8, 2010; Eric Sigurdson, General Counsel, Chief Legal Officers & In-House Counsel: Five New Year’s Resolutions – Leadership, Operations, Metrics, Technology, and External Counsel, Sigurdson Post, December 13, 2016:

“This evolution from legal adviser to strategic adviser is significant because it wasn’t very long ago that the General Counsel’s role was more narrowly defined. In fact, a review of practices throughout the second half of the 20th century shows that most General Counsel didn’t report to the CEO like other members of the executive team, but rather to the CFO (in most cases) – a reporting structure that further fueled the perception that the role of the General Counsel wasn’t on par with the rest of the C-suite, much less that of an adviser to the Board. Since that time however, a rapidly escalating regulatory landscape and a growing wave of complex mergers and acquisitions have paved the way for General Counsel to assume their recognized place among the leadership team. Moreover, in recent years, there has been a change in the perception of in-house counsel as contributors to the organization’s success. In fact, 93% of the respondents in the Rise of the GC Report 2016 survey now consider the General Counsel to be part of the executive management team (compared with 81% a decade ago), and this number is expected to climb to 96.5% by the year 2020. In addition to traditional areas of responsibility, such as compliance and transactions, the survey study indicates that the role of general counsel will continue to evolve to encompass strategic issues, such as corporate governance, where 85% of directors and officers are of the opinion that General Counsel will add value in 2020. As well, 49% believe General Counsel will add value to enterprise risk oversight and crisis management.”

[36] Peter J. Henning, How GM’s Lawyers Failed in their Duties, New York Times, June 9, 2014. Also see: Geoffrey Smith and Roger Parloff, Hoaxwagen: How the massive diesel fraud incinerated VW’s reputation – and will hobble the company for years to come, Fortune, March 7, 2016.

[37] Ben Heineman Jr., The Inside Counsel Revolution: Resolving the Partner-Guardian Tension, 2016; Professor John Coffee, Gatekeepers: The Professions and Corporate Governance, 2007.

[38] Ben Heineman Jr., The Inside Counsel Revolution: Resolving the Partner-Guardian Tension, 2016; Ben Heineman, Jr., Inside the in-house counsel revolution, The Lawyer Daily, April 25, 2017; Ben Heineman, Jr., The Inside Counsel Revolution, Harvard Law School Forum on Corporate Governance and Financial Regulation, March 29, 2016:

“I am optimistic that these board and CEO attitudes can—and will—exist. This is so not because of some nice theory, but because of hard necessity. The inside counsel revolution occurred in part as a reaction to the excesses and acquisitiveness of outside law firms. But the key driver was the dramatic increase in global commercial complexity and in related “business in society” issues that sophisticated inside lawyers can handle with speed and skill. Astute CEOs and boards know that successful performance depends importantly on navigating effectively and fairly myriad laws, regulations and geopolitical risk­ and addressing myriad, critical NCO, media and public voices which limit business. They know that legal function itself can create significant value: in, e.g., taxes, trade, environment, IP, M&A, commercial law and public policy. They know that highly talented, broadly experienced, analytically rigorous and consistently innovative general counsel—and an outstanding law department—are needed to deal in a systematic and rigorous way with the core issues of business strategy, culture, compliance, ethics, risk, governance and citizenship.

Because these necessities, and the external pressures on corporations, are only going to increase, I believe that the inside counsel revolution—and support for the concomitant roles of lawyer-statesperson and partner-guardian—will continue to gain board and CEO adherents in global companies, both in in the U.S. and in the rest of the world.”

Also see, Daneil Lucien Buhr and Herbert Wohlmann, Top Five Governance Principles for the Corporate Legal Function, Ethic Intelligence, July 2013.

[39] 4 Ways Boards Can Improve Relations with the General Counsel, Boardroom Resources, 2016; Ben Heineman Jr., The Inside Counsel Revolution: Resolving the Partner-Guardian Tension, 2016.

[40] Jorg Thierfelder, The Role of the General Counsel with the Board of Directors, GonZehnder.com, 2017. Also see, Daneil Lucien Buhr and Herbert Wohlmann, Top Five Governance Principles for the Corporate Legal Function, Ethic Intelligence, July 2013.

[41] Professor Stephen Bainbridge, Remarks on In House Counsel as Gatekeepers, Professor Bainbridge.com, October 4, 2011. See, Report of the American Bar Association Task Force on Corporate Responsibility, American Bar Association, March 31, 2003.

[42] 4 Ways Boards Can Improve Relations with the General Counsel, Boardroom Resources, 2016; Ben Heineman Jr., The Inside Counsel Revolution: Resolving the Partner-Guardian Tension, 2016.

[43] David B.Wilkins, The In-House Counsel Movement, Metrics of Change, Legal Business World, January 20, 2017. Also see, S. Burcu Avci and H. Nejat Seyhun, Why Don’t General Counsels Stop Corporate Crime?, Finance Law Policy.umich.edu, July 13, 2016:

“Our evidence suggests that the lack of action on the part of the general counsels in stopping corporate wrongdoing is not lack of access to top-level information. Instead, our evidence indicates that general counsels act in concert with the other top executives and they are aware of the corporate wrongdoing. To gain greater co-operation from the general counsels’ office, we suggest the following policy recommendations. …

[A] third policy response should be creation of an independent corporate counsel tasked with the sole responsibility as a gatekeeper. This could mimic the function of an internal auditor, protected with similar authority and responsibilities. We would expect the gatekeeper counsel to report directly to independent board members instead of the CEO.”

[44] Daneil Lucien Buhr and Herbert Wohlmann, Top Five Governance Principles for the Corporate Legal Function, Ethic Intelligence, July 2013.

[45] Jorg Thierfelder, The Role of the General Counsel with the Board of Directors, GonZehnder.com, 2017.

[46] Camille Jovanovic and Steve Chan, Is Corporate Culture on Your Agenda?, Institute of Corporate Directors, May 8, 2017. Also see, Harvard Business Review, The ‘Business in Society’ Imperatives for CEOs, Global Advisors, December 20, 2016; Jorg Thierfelder, The Role of the General Counsel with the Board of Directors, Egon Zehnder.com, 2017; 2014 Global Risk Survey, Deloitte; Cindy Fornelli, Protecting that ‘Priceless Asset’ – Your Company’s Reputation, LinkedIn, January 3, 2017; Kim Harrison, Why a good corporate reputation is important to your organization, Cutting Edge PR.com; Robert Eccles, Scott Newquist, and Roland Schatz, Reputation and its Risks, Harvard Business Review, February 2007.

[47] Cherly Foy, Defining the boundaries of in-house counsel, Canadian Lawyer, January 9, 2012.

[48] Per-Ola Karlsson, DeAnne Aguirre, and Kristin Rivera, Are CEOs Less Ethical Than in the Past?, Strategy and Business, May 15, 2017:

1. Organizational and external influences.Unethical behavior is typically triggered by some kind of pressure or incentive. Financial pressures (such as bonus packages or stock options) are often assumed to be the primary driver of bad behavior. But this is a misconception. Rather, social pressures tend to create larger problems. Employees and managers may be unwilling to admit they can’t meet performance targets. An organization that prides itself on never missing a quarterly earnings target, for example, may inadvertently create this kind of pressure.
2. Business processes.Weak business practices or lax financial controls create opportunities for unethical behavior. Most large companies in developed countries have robust financial controls, and these have been strengthened over the last two decades by the requirements of the Sarbanes-Oxley Act in the U.S. and similar laws elsewhere.
3. Individual ethical decision making.Employees who break the rules must first convince themselves that their actions are justifiable, a process known as rationalization. In some cases, they feel they have no alternative if they are to keep their job or meet their performance targets. In other cases, they convince themselves that their conduct isn’t really wrong, or that it is justified because the organization’s culture or leadership implicitly condones it.

Also see: Ivy Walker, Ethikos Classic: Following the Boss’s Orders Might Land You in Jail, Compliance and Ethics.org, May 23, 2017 (reprinted from Classic Ethikos, The Journal of Practical Business Ethics, July/August 2016); Michael Hiltzik, At United Airlines and Wells Fargo, toxic corporate culture starts with the CEO, Los Angeles Times, April 11, 2017;  Susan Ochs, The Leadership Blind Spots at Wells Fargo, Harvard Business Review, October 6, 2016 (“The post-scandal scrutiny of Wells Fargo’s culture has so far focused on the high-pressure sales environment that drove employees to create as many as two million fake accounts. Former employees have alleged a “soul-crushing” culture of fear and daily intimidation by managers, where they were pressured to reach extreme sales goals, some by breaking the law.”).

[49] Significant corporate scandals and organizational crisis from 2001 to 2017: Enron (2001), HIH Insurance (2001), WorldCom (2002), Freddie Mac mortgage scandal (2003), AIG accounting scandal (2005), Lehman Brothers investment bank and subprime mortgage crisis (2008), Bernard Madoff’s $65 Billion hedge fund Ponzi Scheme (2008), News of the World UK newspaper phone hacking scandal (2011); Libor (London Interbank Offered Rate) fixing scandal and Barclays Bank (2012), GM deadly ignition switch scandal (2014); Volkswagen’s DieselGate (2015), Wells Fargo banking scandal (2016), United Airlines ‘re-accommodated’ doctor (2017), as well as the 2008 credit markets’ disintegration that cascaded into the global financial meltdown that significantly threatened global capitalism.

[50] Delotte Development, Tone at the top: The first ingredient in a world-class ethics and compliance program, Deloitte, 2015; Rita Trehan, Avoiding Corporate Scandals, theCsuite.co.uk, November 28, 2016. Also see, Chris Matthew and Matthew Heimer, The 5 Biggest Corporate Scandals of 2016, Fortune, December 28, 2016; Geoffrey James, Top 10 Brand Scandals of 2015, Inc., September 26, 2015; Syed Balkhi, 25 Biggest Corporate Scandals Ever, List25.com, July 15, 2014; Top 10 CEO Scandals, Time, August 10, 2010; Eric Sigurdson, Corporate Leadership and Culture: United Airlines & the ‘Re-accomodated’ Doctor – guiding principles for Boards, C-suite executives, and General Counsel, Sigurdson Post, May 2, 2017; Eric Sigurdson, Corporate and Government Scandals: A Crisis in ‘Trust’ – Integrity and Leadership in the age of disruption, upheaval and globalization, Sigurdson Post, May 31, 2017.

[51] Martin Meredith and Sascha Hindmarch, Keeping the ‘House’ Ethically ‘Clean’, Law Society of South Australia, October 2014.

[52] Ben Martin, Ex-Barclays boss faces 22 years in jail if guilty of fraud, The Telegraph, June 20, 2017; Chad Bray, Barclays and Former Executives Charged in Qatar Fund-Raising, New York Times, June 20, 2017.

[53] Sue Resinger, Britain Files Criminal Fraud Charges as US Regulators Probe Barclays, Corporate Counsel, June 20, 2017.

[54] Catherine McGregor, Whistleblowers and the In-House Lawyer: A question of ethics and objectivity, GC Magazine (legal500.com), Winter 2014.

[55] Center for Regulatory Strategy, Managing Conduct Risk: Addressing Drivers, Restoring Trust, Deloitte, 2017. Note: Drivers and root causes of misconduct and poor behaviour and practices within a corporation include and are inter-related with corporate culture and leadership. These may include, for example:

• Disparate subcultures or problematic prevailing culture.
• Individuals and leadership are not responsible or held to account for poor conduct.
• Complex, disconnected or ‘growth at all costs’ business model.
• Conflicts of interest are not identified or managed.
• Product is not guided by customer needs and suitability.
• Weak systems of monitoring and surveillance.
• Manual and complicated processes and procedures.
• Decisions are not based on a ‘balanced scorecard’.

[56] Rita Trehan, Avoiding Corporate Scandals, theCsuite.co.uk, November 28, 2016.

[57] Geoffrey Smith and Roger Parloff, Hoaxwagen: How the massive diesel fraud incinerated VW’s reputation – and will hobble the company for years to come, Fortune, March 7, 2016.

[58] Constance Bagley, Mark Roellig, Gianmarco Massameno, Who Let the Lawyers Out: Reconstructing the Role of the Chief Legal Officer and the Corporate Client in a Globalizing World, U. of Pennsylvania Journal of Business Law, Vol. 18:2, page 419, 2016.

[59] See for example: Olga V. Mack, Katia Bloom, Corporate Responsibility and Sustainability: A Guide For Lawyers, Docket, May 30, 2017; Ben Heineman, Jr, GC’s Critical Public Policy Role in an Age of Disruption, Docket, March 22, 2017. Also see, Eugene Soltes, Why It’s So Hard to Train Someone to Make an Ethical Decision, Harvard Business Review, January 11, 2017:

“The challenge for organizations is to cultivate environments where ethical decisions are easier, not more difficult. Creating training exercises that better simulate the actual environment, circumstances, and pressures where ethical decisions are made is the first step toward addressing these critical challenges. All high-performance athletes know they need to train in the same environment as the one in which they will compete. It ought to be no different for managers who must continually train and prepare for the big ethical decisions they will inevitably face.”

[60] Peter J. Henning, How GM’s Lawyers Failed in their Duties, New York Times, June 9, 2014.

[61] Ivy Walker, Ethikos Classic: Following the Boss’s Orders Might Land You in Jail, Compliance and Ethics.org, May 23, 2017 (reprinted from Classic Ethikos, The Journal of Practical Business Ethics, July/August 2016). Also see, John Laidler, When the law and conscience intersected: At Harvard Law School, Sally Yates explains why she refused to enforce travel ban, even if it cost her job , Harvard Law Today, May 25, 2017:

“Over the course of your life and your career, you too will face weighty decisions where the law and conscience intertwine,” Yates told students. “And while it may not play out in such a public way, the conflict that you’ll feel will be no less real, and the consequences of your decision also significant.”

[62] Yin Wilczek, Top Abercrombie Lawyer Sounds Off on VW, Saying CEO is Not the Client, Bloomberg, May 11, 2017.

[63] Diane L. Swanson, Addressing a Theoretical Problem in Reorienting the Corporate Social Performance Model, 20 Acad. Management Review 43, 51, 1995. Also see, Constance Bagley, Mark Roellig, Gianmarco Massameno, Who Let the Lawyers Out: Reconstructing the Role of the Chief Legal Officer and the Corporate Client in a Globalizing World, U. of Pennsylvania Journal of Business Law, Vol. 18:2, page 419, 2016.

[64] Constance Bagley, Mark Roellig, Gianmarco Massameno, Who Let the Lawyers Out: Reconstructing the Role of the Chief Legal Officer and the Corporate Client in a Globalizing World, U. of Pennsylvania Journal of Business Law, Vol. 18:2, page 419, 2016.

[65] Constance Bagley, Mark Roellig, Gianmarco Massameno, Who Let the Lawyers Out: Reconstructing the Role of the Chief Legal Officer and the Corporate Client in a Globalizing World, U. of Pennsylvania Journal of Business Law, Vol. 18:2, page 419, 2016.

[66] Rebecca Lowe, Compliant Counsel, 8(2) In-House Perspective 13, 14, 2012; Constance Bagley, Mark Roellig, Gianmarco Massameno, Who Let the Lawyers Out: Reconstructing the Role of the Chief Legal Officer and the Corporate Client in a Globalizing World, U. of Pennsylvania Journal of Business Law, Vol. 18:2, page 419, 2016.

[67] Constance Bagley, Mark Roellig, Gianmarco Massameno, Who Let the Lawyers Out: Reconstructing the Role of the Chief Legal Officer and the Corporate Client in a Globalizing World, U. of Pennsylvania Journal of Business Law, Vol. 18:2, page 419, 2016.

[68] Cheryl Foy, In-house counsel wanted: lawyers without courage need not apply, Canadian Lawyer, February 25, 2013.

[69] Paul Waldie, Will Conrad Black go back to jail?, Globe and Mail, June 22, 2011 (“Peter Atkinson: Hollinger’s former vice-president and general counsel was also convicted of three fraud charges in 2007 and received a 27-month sentence.”); Chad Bray, Former Comverse Official Receives Prison Term in Options Case, Wall Street Journal, May 11, 2007 (“former senior general counsel was sentenced to one year and one day in prison”); 2 Years in Prison for Ex-Software Executive, New York Times, January 17, 2007 (“former general counsel at Computer Associates, Steven Woghin, was sentenced to two years in prison for his role in a scheme to increase the company’s quarterly revenue artificially”); Paula McMahon, Rothstein’s former general counsel gets prison for fraud, Sun Sentinel, January 30, 2015; Tabby Kinder, Ex-GFH Capital general counsel Haigh sentenced to two years in jail in Dubai, The Lawyer, September 2, 2015; Jon Hurdle and Richard Perez-Pena, Kathleen Kane, Former Pennsylvania Attorney General, is Sentenced to Prison, New York Times, October 24, 2016; Debra Cassens Weiss, Former GC Sentenced to 15 Years for Aiding Life Settlement Fraud; Defense Argued He Was Naïve, ABA Journal, July 29, 2011; Peter J. Henning, How GM’s Lawyers Failed in their Duties, New York Times, June 9, 2014; Sue Reisinger, VW In-House Lawyer Implicated, 6 Others Indicted by DOJ, Inside Counsel, January 13, 2017; E. Norman Veasey and Christine T. Di Guglielmo, Indispensable Counsel: The Chief Legal Officer in the New Reality, February 2012.

[70] Donald J. Polden (Dean and Prof of Law, Santa Clara University), Leadership Matters: Lawyers’ Leadership Skills and Competencies, Santa Clara Law Review, Vol. 52, No. 3, September 21, 2012. Also see: Eric Sigurdson, Lawyers and Leadership: effective and ethical judgement and decision-making required to address societal and professional challenges, Sigurdson Post, September 5, 2016; Eric Sigurdson, Corporate Culture, Leadership and Personal Liability – Ethics and Compliance Programs in the 21^st Century, Sigurdson Post, October 5, 2016.

[71] Bjarne Tellman, The Importance of Courage for In-House Counsel, Barker Gilmore.com, May 30, 2017; Bjarne Tellman, Building an Outstanding Legal Team: Battle-Tested Strategies from a General Counsel, April 2017.

[72] David Mowry, Really, VW? Part One: the big question of the Volkswagen scandal – where were the lawyers?, Above the Law, September 30, 2015.

[73] Ben W. Heineman, Jr., The Inside Counsel Revolution: Resolving the Partner-Guardian Tension, 2016; Survey: The Rise of the GC Report 2016: From Legal Adviser to Strategic Adviser, NYSE Governance Services / BarkerGilmore Survey Report, www.nyse.com.

[74] E. Norman Veasey and Christine T. Di Guglielmo, Indispensable Counsel: The Chief Legal Officer in the New Reality, February 2012.

[75] Azish Filabi and Jim Lager, Professionalism and Ethical Leadership from General Counsel’s Suite, Lawyer Watch, March 17, 2016.

[76] Mary Vallis, Atkinson gets a lighter jail term, National Post, December 11, 2007. Also see, Paul Waldie, Will Conrad Black go back to jail?, Globe and Mail, June 22, 2011 (“Peter Atkinson: Hollinger’s former vice-president and general counsel was also convicted of three fraud charges in 2007 and received a 27-month sentence.”); The other cases: with his ex-partners in crime now sentenced to prison time, David Radler – the turncoat in the Conrad black trail – awaits the final word on his fate, The Star, December 11, 2007 (“Peter Atkinson … guilty of three counts of mail fraud and of receiving non-compete payments in excess of $2 million (U.S.) illegally … twenty-four months in prison and three years probation”); Andrew Clark, Radler paroled for $60m fraud with Conrad Black, The Guardian, December 16, 2008; Toby Harnden, David Radler, Conrad Black’s partner in crime, The Telegraph, July 14, 2007.

[77] Benjamin W. Heineman Jr., The General Counsel as Lawyer-Statesman, Harvard Law School Forum on Corporate Governance and Financial Regulation, September 5, 2010.

[78] Ben Heineman, Jr., Inside the in-house counsel revolution, The Lawyer Daily, April 25, 2017 – as part of the executive leadership team, the ideal of a modern corporation is that the General Counsel must be part of and help create the trust in the enterprise which is vital to its sustainability and durability.

[79] Survey: The Rise of the GC Report 2016: From Legal Adviser to Strategic Adviser, NYSE Governance Services / BarkerGilmore Survey Report, www.nyse.com; eBook: Skills for the 21^st Century General Counsel, Association of Corporate Counsel, 2013. Also see, Eric Sigurdson, General Counsel, Chief Legal Officers & In-House Counsel: Five New Year’s Resolutions – Leadership, Operations, Metrics, Technology, and External Counsel, Sigurdson Post, December 13, 2016:

“The 2016 survey, The Rise of the GC: From Legal Advisor to Strategic Advisor,[79] notes that while the scope of General Counsels’ responsibilities varies depending on company size and industry, the research shows that increasingly, many are becoming influential components of the senior management team. Indeed, a compelling majority of directors and officers (more than 70%) agree that by 2020, in-house counsel’s most valuable functions will likely shift from serving as an ethical sounding board and ensuring the Board adheres to best governance practices (which ranked first and second in 2015) to acting as adviser to the Board and the CEO.

The General Counsel is being looked upon increasingly for strategic and business advice—not just legal advice. As the scope of both enterprise risk oversight and corporate governance continues to expand and evolve, so does the role of the corporate General Counsel. There is little argument that today’s General Counsel has a much wider purview beyond the customary responsibility of serving as the organization’s chief legal officer and, quite often, its corporate secretary. As these roles shift, many organizations are finding that the perspective of the General Counsel—who has been trained to analyze issues legally, ethically, and objectively, is uniquely positioned – to bring additional insights to strategic decisions. …

As a key player at the center of the strategic team of the enterprise, the General Counsel and legal team must build collaborative relationships with other roles across the business, and address wide-ranging stakeholder demands and concerns, such as – for example – (a) the Board and C-suite’s need for clear and reliable information about legal, business, ethics, and regulatory risks to drive strategic decisions and future outcomes; and (b) the need to allocate limited resources to minimize exposure to significant risks.”

[80] eBook: Skills for the 21^st Century General Counsel, Association of Corporate Counsel, 2013.

[81] David B.Wilkins, The In-House Counsel Movement, Metrics of Change, Legal Business World, January 20, 2017. Also see, FAQ: Privilege and Confidentiality for In-House Counsel, Canadian Bar Association – Canadian Corporate Counsel Association, 2012 (see Q. 15. Are my communications with the in-house counsel of my company’s European subsidiary privileged?); Jennifer Wiliams-Alvarez, ACC Joins Amicus Brief on Case That May ‘Undermine’ In-House Counsel’s Ability to Function, Corporate Counsel, June 9, 2017; Antonio, Di Domenico, Privilege, In-House Counsel and the Multi-Jurisdictional Practice of Competition Law: Why your Internal Communications may be at Risk, Fasken.com, October 22, 2010; Legal Privilege, Bennett Jones, November 2014 (Canada); Profession of Company Lawyers in Europe: Legal Professional Privilege, European Company Lawyers Association (ecla.org).

[82] David B.Wilkins, The In-House Counsel Movement, Metrics of Change, Legal Business World, January 20, 2017; S. Burcu Avci and H. Nejat Seyhun, Why Don’t General Counsels Stop Corporate Crime?, Finance Law Policy.umich.edu, July 13, 2016:

“Our evidence suggests that the lack of action on the part of the general counsels in stopping corporate wrongdoing is not lack of access to top-level information. Instead, our evidence indicates that general counsels act in concert with the other top executives and they are aware of the corporate wrongdoing. To gain greater co-operation from the general counsels’ office, we suggest the following policy recommendations. …

[A] third policy response should be creation of an independent corporate counsel tasked with the sole responsibility as a gatekeeper. This could mimic the function of an internal auditor, protected with similar authority and responsibilities. We would expect the gatekeeper counsel to report directly to independent board members instead of the CEO.”

[83] David B.Wilkins, The In-House Counsel Movement, Metrics of Change, Legal Business World, January 20, 2017.

[84] David B.Wilkins, The In-House Counsel Movement, Metrics of Change, Legal Business World, January 20, 2017.

[85] Professor Stephen Bainbridge, Remarks on In House Counsel as Gatekeepers, Professor Bainbridge.com, October 4, 2011.

[86] 4 Ways Boards Can Improve Relations with the General Counsel, Boardroom Resources, 2016; Ben Heineman Jr., The Inside Counsel Revolution: Resolving the Partner-Guardian Tension, 2016.

[87] Episode Summary, Challenges of the GC and Corporate Secretary: Recognizing Red Flags, Boardroom Resources, 2017.

[88] E. Norman Veasey and Christine T. Di Guglielmo, Indispensable Counsel: The Chief Legal Officer in the New Reality, February 2012.

[89] Jerry Useem, What Was Volkswagen Thinking? On the origins of corporate evil – and idiocy, Atlantic, January-February 2016:

“We know what strain does to people. Even without it, they tend to underestimate the probability of future bad events. Put them under emotional stress, some research suggests, and this tendency gets amplified. People will favor decisions that pre-empt short-term social discomfort even at the cost of heightened long-term risk. Faced with the immediate certainty of a boss’s wrath or the distant possibility of blowback from a faceless agency, many will focus mostly on the former. … This reaction isn’t excusable. But it is predictable.”

[90] Volkswagen: Jerry Useem, What Was Volkswagen Thinking? On the origins of corporate evil – and idiocy, Atlantic, January-February 2016; Robert Armstrong, The Volkswagen scandal shows that corporate culture matters: economics alone struggles to explain the German carmaker’s disastrous choices, Financial Times, January 13, 2017; Bob Glazer, The Biggest Lesson from Volkswagen: Culture Dictates Behaviour, Entrepreneur, January 8, 2016 (“Culture is a powerful force that can cause people to make decisions that aren’t in their companies’ best interests. And when the status quo doesn’t allow for honest internal communication, businesses can end up facing disaster. Consider what happened with Volkswagen’s “no-failure” culture and its emissions-test scandal. … CEO Martin Winterkorn was a demanding boss who abhorred failure. Former executives described his management style as authoritarian and aimed at fostering a climate of fear.”); Deron Levin, VW CEO needs to address ‘culture of arrogance ‘, Fortune, September 27, 2015; Ira Chaleff, VW’s culture of blind obedience: What went wrong and how to fix it, NSNBC.com, September 26, 2015. GM: Geoff Colvin, How CEO Mary Bara is using the ignition-switch scandal to change GM’s culture, Fortune, September 18, 2015 (“Defeating an entrenched, dysfunctional culture in a huge, old company is rare”); Tim Kuppler, The GM Culture Crisis: what leaders must learn from this culture case study, SwitchandShift.com, June 8, 2014; Jeff Bennett and Joann S. Lulin, GM Recall Probe to Blame Cultural Failings, Wall Street Journal, June 4, 2014. Wells Fargo: Richard Griffith, Wells Fargo – Lessons Learned, Impact on Integrity, May 2017 (“the core principle of “doing good ethical business” at Wells Fargo was compromised and replaced with an apparent drive for profit maximisation at the expense of clients’ best interests.”); Chris Cancialosi, Wells Fargo and the True Cost of Culture Gone Wrong, Forbes, September 15, 2016; Gillian B. White, Can Wells Fargo Ever Make Amends?, Atlantic, April 11, 2017 (“the culture is not working … replacing the CEO and the head of the community-banking division are important to reframing the bank’s culture, there’s much more that will need to be done.”); Emily Glazer, Wells Fargo Digs Deeper Into Its Culture Issues, Wall Street Journal, March 21, 2017; Geoff Calvin, The Wells Fargo Scandal Is Now Reaching VW Proportions, Fortune, January 26, 2017 (“this scandal … reflects a massively broken corporate culture, not just the acts of a few bad men and women”); Maryam Kouchaki, How Wells Fargo’s Fake Accounts Scandal Got so Bad, Fortune, September 15, 2016 (“case offers important lessons for how companies can avoid creating a culture vulnerable to corruption”); Kris Duggan, How Wells Fargo Could Have Avoided its Fake Accounts Scandal, Fortune, October 12, 2016 (“If today’s banks truly want to change their cultures and increase employee engagement, it starts with setting the right goals and having the right performance conversations”); Bethany McLean, How Wells Fargo’s Cutthroat Corporate Culture Allegedly Drove Bankers to Fraud, Vanity Fair, Summer 2017 (“The better they did at sales, the more they advanced, so it got spread across the company. An entire generation of managers thrived in the culture, got rewarded for it, and are now in positions of power.”). Deutsche Bank: Alex Newman, Deutsche Bank GC Criticised by German Banking Regulator, Legal Week, January 7, 2014 (“Germany’s financial regulatory body has singled out Deutsche Bank general counsel Richard Walker in a report urging the bank to make senior management changes in the wake of the Libor scandal”.); David Enrich, Jenny Strasburg and Eyk Henning, Germany blasts Deutsche Bank executives over culture, Wall Street Journal, July 16, 2015 (“German regulators accused a half-dozen current Deutsche Bank executives of failing to stop or tell regulators about years of attempted market manipulation, according to a confidential report reviewed by The Wall Street Journal that portrays the German bank as suffering from a badly broken corporate culture.”).

[91] Alice Woolley, The Volkswagen Scandal: When We Ask, ‘Where Were the Lawyers?’ Do We Ask the Wrong Question?, Slaw, September 30, 2015.

[92] M.A. Sargent, Lawyers in the Moral Maze, 49 Villanova Law Review 867, 2004; Richard Moorhead, Cristina Godinho, Steven Vaughan, Paul Gilbert, Stephen Mayson, Mapping the Moral Compass: relationships between in-house lawyers’ role, professional orientations, team cultures, organisational pressures, ethical infrastructure and ethical inclination, Centre for Ethics and Law (Ethical Leadership for In-House Lawyers Initiative), June 2016; R. Moorhead and V. Hinchly, Professional Minimalism? The Ethical Consciousness of Commercial Lawyers, 42 Journal of Law and Society 387, 2015; Steven Vahghan and Emma Oakley, ‘Gorilla exceptions’ and the ethically apathetic corporate lawyer, tandfonline.com, June 30, 2016; Azish Filabi and Jim Lager, Professionalism and Ethical Leadership from General Counsel’s Suite, Lawyer Watch, March 17, 2016. Also see, Eugene Soltes, Why It’s So Hard to Train Someone to Make an Ethical Decision, Harvard Business Review, January 11, 2017:

“When there’s precious little time to deeply reflect on decisions, we rely on routines and the surrounding norms to dictate behavior. In the recent case of Wells Fargo, most employees didn’t have the time or incentive to question the practice of cross-selling products without client approval; they relied on the surrounding culture that supported these corrupt practices. Remaining efficient and productive overtook deeper reflection on the ethical implications of “selling” products to customers without their knowledge. Had employees had greater opportunities to reflect on their actions in a less constrained and pressured workplace, many might have felt considerably less comfortable with these practices.

The challenge for organizations is to cultivate environments where ethical decisions are easier, not more difficult. Creating training exercises that better simulate the actual environment, circumstances, and pressures where ethical decisions are made is the first step toward addressing these critical challenges. All high-performance athletes know they need to train in the same environment as the one in which they will compete. It ought to be no different for managers who must continually train and prepare for the big ethical decisions they will inevitably face.”

[93] Professor Stephen Bainbridge, Remarks on In-House Counsel as Gatekeepers, Professor Bainbridge.com, October 4, 2011.

[94] Professor Stephen Bainbridge, Remarks on In-House Counsel as Gatekeepers, Professor Bainbridge.com, October 4, 2011.

[95] Jerry Useem, What Was Volkswagen Thinking? On the origins of corporate evil – and idiocy, Atlantic, January-February 2016.

[96] Alice Woolley, The Volkswagen Scandal: When We Ask, ‘Where Were the Lawyers?’ Do We Ask the Wrong Question?, Slaw, September 30, 2015.

[97] Ben Heineman, Jr., Caught in the Middle, Corporate Counsel, April 2007.

[98] Bob Glazer, The Biggest Lesson from Volkswagen: Culture Dictates Behaviour, Entrepreneur, January 8, 2016.

[99] Ira Chaleff, VW’s culture of blind obedience: What went wrong and how to fix it, NSNBC.com, September 26, 2015.

[100] Alice Woolley, The Volkswagen Scandal: When We Ask, ‘Where Were the Lawyers?’ Do We Ask the Wrong Question?, Slaw, September 30, 2015.

[101] Bill George, Why Leaders Lose Their Way, Harvard Business School: Working Knowledge, June 6, 2011. Also see, Richard S. Deems, Terri A. Deems, Leading in Tough Times: The Manager’s Guide to Responsibility, Trust, and Motivation, 2003 (chap. 10, What If I’m Asked to Do Something Illegal?)

[102] Douglas Conant, Leaders Always Have a Choice. In Tough Situations, Make this Better Choice, Linkedin, June 13, 2017.

[103] Board Oversight of Corporate Culture, ViewPoints, Tapestry Networks and EY, July 13, 2015 – On June 9–10, 2015, members of the Audit Committee Leadership Networks in North America (ACLN) and Europe (EACLN) met in New York, with one session dedicated to a discussion about issues related to corporate culture. This ViewPoints presents a summary of the key points, along with background information and selected perspectives that members and subject matter experts shared before and after the meeting:

“Conclusion: Members agreed on the importance of culture for a company and on their role in overseeing culture: “It’s the board’s responsibility – we are the conscience of the company, we provide an outsider view of whether [the] company is healthy. We have a moral responsibility.” Members agreed that hiring, firing, and compensating the CEO and senior management is the main tool they have in changing the culture of a company. They also agreed that culture needs to become a standing agenda item for the board to make sure complacency doesn’t become an issue and that a strong culture remains a focus of management and employees. To help oversee that monitoring, members see a dashboard with cultural indicators from across the company as a useful tool. Having either internal audit or a separate culture team monitor culture and feed data into the dashboard is also a practice members said is useful.”

[104] Camille Jovanovic and Steve Chan, Is Corporate Culture on Your Agenda?, Institute of Corporate Directors, May 8, 2017.

[105] Lynn S. Paine, Managing for Organizational Integrity, Harvard Business Review, March-April 1994.

[106] PwC 2016 CEO Success Study, strategyand.pwc.com; Per-Ola Karlsson, DeAnne Aguirre, and Kristin Rivera, Are CEOs Less Ethical Than in the Past?, Strategy and Business, May 15, 2017.

[107] Brent Gleeson, How Great Leaders Transform a Broken Culture, Forbes, June 12, 2017.

[108] Deborah L. Rhode, In the Interests of Justice: Reforming the Legal Profession, 2000. Also see, Paul D. Paton, Corporate Counsel as Corporate Conscience: Ethics and Integrity in the Post-Enron Era, Canadian Bar Review, Vol. 84, page 533, 2006.

[109] Professor Stephen Bainbridge, Remarks on In-House Counsel as Gatekeepers, Professor Bainbridge.com, October 4, 2011. Also see, Judith Seddon and Chris Stott, United Kingdom: whistleblowers and self-reporting, Global Investigations Review, May 25, 2017.

[110] David B.Wilkins, The In-House Counsel Movement, Metrics of Change, Legal Business World, January 20, 2017.

[111] Martin Meredith and Sascha Hindmarch, Keeping the ‘House’ Ethically ‘Clean’, Law Society of South Australia, October 2014.

[112] Constance Bagley, Mark Roellig, Gianmarco Massameno, Who Let the Lawyers Out: Reconstructing the Role of the Chief Legal Officer and the Corporate Client in a Globalizing World, U. of Pennsylvania Journal of Business Law, Vol. 18:2, page 419, 2016.

[113] Professor Stephen Bainbridge, Remarks on In-House Counsel as Gatekeepers, Professor Bainbridge.com, October 4, 2011.

[114] Paul Goyette, Is a High-Performance Culture Right for You?, Eagle’s Flight.com, June 14, 2017.

[115] Ben Heineman Jr., The Inside Counsel Revolution: Resolving the Partner-Guardian Tension, 2016. See, Deloitte, Corporate Culture: The second ingredient in a world-class ethics and compliance program, 2015: a sound corporate culture are generally characterized by:

• Organizational values: A set of clear values that, among other things, emphasizes the organization’s commitment to legal and regulatory compliance, integrity, and business ethics.
• Tone at the top: Executive leadership and senior managers across the organization encourage employees and business partners to behave legally and ethically, and in accordance with compliance and policy requirements.
• Consistency of messaging: Operational directives and business imperatives align with the messages from leadership related to ethics and compliance.
• Middle managers who carry the banner: Front-line and mid-level supervisors turn principles into practice. They often use the power of stories and symbols to promote ethical behaviors.
• Comfort speaking up: Employees across the organization are comfortable coming forward with legal, compliance, and ethics questions and concerns without fear of retaliation. ^[115]
• Accountability: Senior leaders hold themselves and those reporting to them accountable for complying with the law and organizational policy, as well as adhering to shared values or organizational values.
• The hire-to-retire life cycle: The organization recruits and screens employees based on character, as well as competence. The on-boarding process steeps new employees in organizational values, and mentoring also reflects those values. Employees are well-treated when they leave or retire, creating colleagues for life.
• Incentives and rewards: The organization rewards and promotes people based, in part, on their adherence to ethical values. It is not only clear that good behavior is rewarded, but that bad behavior (such as achieving results regardless of method) can have negative consequences.
• Procedural justice: Internal matters are adjudicated equitably at all levels of the organization. Employees may not always agree with decisions, but they will accept them if they believe a process has been fairly administered.

[116] Derek Hayes, How Do Ethical Standards Apply to In-House Counsel, Canadian Centre for Ethics and Corporate Policy, 2002.

[117] Guidance for In-House Counsel on Ethical Decision Making, Australian Corporate Lawyer’s Association, 2013.

[118] ACC Chief Legal Officers 2017 Survey, ACC.com (Association of Corporate Counsel), January 2017:

“Twenty-eight percent of CLOs report being targeted by a regulator with respect to an alleged violation of the law, and 77 percent report handling at least one internal or external compliance-related investigation in their department.”

[119] Sterling Miller, Ten Things: Common Ethics Issues for In-House Counsel, SterlingMiller2014.com, August 18, 2015.

[120] Derek Hayes, How Do Ethical Standards Apply to In-House Counsel, Canadian Centre for Ethics and Corporate Policy, 2002.

[121] Crompton v. Commissioners of Customs and Excise, [1972] 2 All E.R. 354 (Q.B.), cited in R. v. Campbell, [1999] 1 S.C.R. 565. But see, for Europe in respect to Solicitor and Client Privilege: Antonio, Di Domenico, Privilege, In-House Counsel and the Multi-Jurisdictional Practice of Competition Law: Why your Internal Communications may be at Risk, Fasken.com, October 22, 2010; Legal Privilege, Bennett Jones, November 2014 (Canada); Profession of Company Lawyers in Europe: Legal Professional Privilege, European Company Lawyers Association (ecla.org); FAQ: Privilege and Confidentiality for In-House Counsel, Canadian Bar Association – Canadian Corporate Counsel Association, 2012 (see Q. 15. Are my communications with the in-house counsel of my company’s European subsidiary privileged?); David B.Wilkins, The In-House Counsel Movement, Metrics of Change, Legal Business World, January 20, 2017:

“Despite years of lobbying, in-house lawyers have still not been able to convince the European Court of Justice and other regulatory authorities that they are entitled to the attorney-client privilege with respect to discussions with their corporate employers. At the core of this decision is a fundamental doubt about whether employed lawyers can ever truly be independent.”

Also see: Jennifer Wiliams-Alvarez, ACC Joins Amicus Brief on Case That May ‘Undermine’ In-House Counsel’s Ability to Function, Corporate Counsel, June 9, 2017.

[122] Martin Meredith and Sascha Hindmarch, Keeping the ‘House’ Ethically ‘Clean’, Law Society of South Australia, October 2014.

[123] Law Society of Upper Canada, Rules of Professional Conduct (Ontario). Also see, Federation of Law Societies of Canada, Model Code of Professional Conduct.

[124] Law Society of Upper Canada, Rules of Professional Conduct, Rule 2.1-1.

[125] Law Society of Upper Canada, Rules of Professional Conduct, Commentary 4.1 to R. 2.1-1.

[126] Law Society of Upper Canada, Rules of Professional Conduct, Rule 3.2-2.

[127] Law Society of Upper Canada, Rules of Professional Conduct, Commentary 2 to R. 3.2-2.

[128] LSUC, Rules of Professional Conduct, Rule 3.2-3 (added in 2004).

[129] Law Society of Upper Canada, Rules of Professional Conduct, Commentary 1 to R. 3.2-3.

[130] LSUC, Rules of Professional Conduct, Rule 3.4-1.

[131] Law Society of Upper Canada, Rules of Professional Conduct, Commentary 1 to R. 3.4-1; LSUC, Rules of Professional Conduct, Rule 1.1-1 (definition of conflict of interest). Also see, R. v. Neil, 2002 SCC 70: A conflict arises where there is “a substantial risk that the lawyer’s representation of the client would be materially and adversely affected by the lawyer’s own interest or by the lawyer’s duties to another current client, a former client, or a third person.”

[132] LSUC, Rules of Professional Conduct, Rule 3.2-7. “Knowingly” – held to require proof of actual knowledge, recklessness, or willful blindness, which is a high level of culpability.

[133] Law Society of Upper Canada, Rules of Professional Conduct, Commentary 1 to R. 3.2-7.

[134] LSUC, Rules of Professional Conduct, Rule 3.2-7.1.

[135] LSUC, Rules of Professional Conduct, Rule 3.2-8.

[136] LSUC, Rules of Professional Conduct, Rule 3.2-8; LSUC, Rules of Professional Conduct, Commentary 1, 3, 5 and 6 to R. 3.2-8.

[137] See: LSUC, Rules of Professional Conduct, Rule 3.7-1 (withdrawal from representation), 2 (optional withdrawal), 7 (mandatory withdrawal), 8 (manner of withdrawal):

“Manner of Withdrawal

3.7-8 When a lawyer withdraws, the lawyer shall try to minimize expense and avoid prejudice to the client and shall do all that can reasonably be done to facilitate the orderly transfer of the matter to the successor legal practitioner.

3.7-9 Upon discharge or withdrawal, a lawyer shall

(a) notify the client in writing, stating

(i) the fact that the lawyer has withdrawn;

(ii) the reasons, if any, for the withdrawal; …”

[138] LSUC, Rules of Professional Conduct, Rule 3.2-8; LSUC, Rules of Professional Conduct, Commentary 4 to R. 3.2-8.

[139] LSUC, Rules of Professional Conduct, Rule 3.3-1 (confidential information), 3.3-1.1 to 3.3 (justified or permitted disclosure); LSUC, Rules of Professional Conduct, Commentary 5.1 to R. 3.3-1.1 to 3:

“A lawyer employed or retained to act for an organization, including a corporation, confronts a difficult problem about confidentiality when he or she becomes aware that the organization may commit a dishonest, fraudulent, criminal, or illegal act. This problem is sometimes described as the problem of whether the lawyer should “blow the whistle” on their employer or client. Although the rules make it clear that the lawyer shall not knowingly assist or encourage any dishonesty, fraud, crime, or illegal conduct (rule 3.2-7) and provide a rule for how a lawyer should respond to conduct by an organization that was, is or may be dishonest, fraudulent, criminal, or illegal (rule 3.2-8), it does not follow that the lawyer should disclose to the appropriate authorities an employer’s or client’s proposed misconduct. Rather, the general rule, as set out above, is that the lawyer shall hold the client’s information in strict confidence, and this general rule is subject to only a few exceptions. Assuming the exceptions do not apply, there are, however, several steps that a lawyer should take when confronted with the difficult problem of proposed misconduct by an organization. The lawyer should recognize that their duties are owed to the organization and not to the officers, employees, or agents of the organization (rule 3.2-3)) and the lawyer should comply with rule 3.2-8, which sets out the steps the lawyer should take in response to proposed, past or continuing misconduct by the organization.”

[140] Julie Sobowale, In-house whistleblowing: Where do your loyalties lie?, CBA National CCCA Magazine, Winter 2015.

[141] Richard Moorhead, Cristina Godinho, Steven Vaughan, Paul Gilbert, Stephen Mayson, Mapping the Moral Compass: relationships between in-house lawyers’ role, professional orientations, team cultures, organisational pressures, ethical infrastructure and ethical inclination, Centre for Ethics and Law (Ethical Leadership for In-House Lawyers Initiative), June 2016.

[142] United States: Peter J. Henning, How GM’s Lawyers Failed in their Duties, New York Times, June 9, 2014 (“Kara M. Stein, a commissioner of the Securities and Exchange Commission, stressed the importance of having lawyers act as gatekeepers to “disrupt or prevent misconduct”); Commissioner Kara M. Stein, U.S. Securities and Exchange Commission, Keynote Address at Compliance Week, May 19, 2014 (“The role of gatekeepers … in-house counsel … unique position to monitor and promote legal compliance…”); Professor Gerry Ferguson, Global Corruption: Law, Theory and Practice – Chapter 8: Advising Businesses on Anti-Corruption Practices, 2d ed. January 2017 (“US rules on internal and external disclosure of wrongdoing”, page 8-22 to 23); Sarbanes Oxley (SOX) 15 U.S.C. § 7245; 17 C.F.R. Part 205 (Securities and Exchange Commission’s Standards of Professional Conduct for Attorneys Appearing and Practicing Before the Commission in the Representation of an Issuer). Rule 17 C.F.R. § 205.3 states:

“If an attorney, appearing and practicing before the Commission in the representation of an issuer, becomes aware of evidence of a material violation by the issuer or by any officer, director, employee, or agent of the issuer, the attorney shall report such evidence to the issuer’s chief legal officer (or the equivalent thereof) or to both the issuer’s chief legal officer and its chief executive officer (or the equivalents thereof) forthwith.”

American Bar Association, Model Rules of Professional Conduct:

Client-Lawyer Relationship
Rule 1.6 Confidentiality Of Information

(a) A lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation or the disclosure is permitted by paragraph (b).

(b) A lawyer may reveal information relating to the representation of a client to the extent the lawyer reasonably believes necessary:

(1) to prevent reasonably certain death or substantial bodily harm;

(2) to prevent the client from committing a crime or fraud that is reasonably certain to result in substantial injury to the financial interests or property of another and in furtherance of which the client has used or is using the lawyer’s services;

(3) to prevent, mitigate or rectify substantial injury to the financial interests or property of another that is reasonably certain to result or has resulted from the client’s commission of a crime or fraud in furtherance of which the client has used the lawyer’s services;

(4) to secure legal advice about the lawyer’s compliance with these Rules; ….

Also see, FAQ: Privilege and Confidentiality for In-House Counsel, Canadian Bar Association – Canadian Corporate Counsel Association, 2012 (see Q. 5. What do I do when there is a possibility of a crime or fraud occurring; Q6. When am I required to raise a matter “up the ladder”); Julie Sobowale, In-house whistleblowing: Where do your loyalties lie?, CBA National CCCA Magazine, Winter 2015:

“The financial scandals of the 2000s, beginning with Sharon Watkins blowing the whistle on Enron, put the issue in the public eye. In the aftermath of the scandals, major reforms were made in financial reporting. As part of the reforms, the American Bar Association (ABA) amended its rules to include third party disclosure. Model Rule 1.6(b)(3) permits lawyers to disclose information “to prevent, mitigate or rectify substantial injury to the financial interests or property of another.” Model Rule 1.13 also allows lawyers to disclose information to third parties “to the extent the lawyer reasonably believes necessary to prevent substantial injury to the organization.”

Jordan Thomas believes that whistleblowers should be protected. As one of the lawyers who helped develop the Securities and Exchange Commission (SEC) Whistleblower Program, he believes that the U.S. has a strong duty to protect the public from economic harm.

“In the U.S., we take the idea of protecting investors and consumers seriously,” says Thomas, partner at Labaton Sucharow, who specializes in representing whistleblowers. “It’s an odd scenario that people know wrongdoing but have to wait until it happens before reporting it. In most circumstances, U.S. law gives people the discretion to report such wrongdoing, instead of requiring them to do so. People have the ability to follow their conscience and not be forced to facilitate wrongdoing or remain silent.”

Disclosure must be restricted to the misconduct. ….”

[143] Canada: Professor Gerry Ferguson, Global Corruption: Law, Theory and Practice – Chapter 8: Advising Businesses on Anti-Corruption Practices, 2d ed. January 2017 (“Canadian rules on internal and external disclosure of wrongdoing”, page 8-24 to 25); FAQ: Privilege and Confidentiality for In-House Counsel, Canadian Bar Association – Canadian Corporate Counsel Association, 2012 (see Q. 5. What do I do when there is a possibility of a crime or fraud occurring; Q6. When am I required to raise a matter “up the ladder”); Federation of Law Societies of Canada, Model Code of Professional Conduct; Law Society of Upper Canada, Rules of Professional Conduct (Ontario); Julie Sobowale, In-house whistleblowing: Where do your loyalties lie?, CBA National CCCA Magazine, Winter 2015:

“So far Canada has not followed the U.S. model. The Federation of Law Societies of Canada (FLSC) reviewed the new ABA rules but decided not to move forward in amending the Model Code of Professional Conduct. In 2010, the Advisory Committee on the Future Harm Exception recommended the rules be amended to include disclosure based on imminent risk of “substantial financial injury.”

“Following consultation with the law societies, it was agreed that more discussion of the proposed future financial harm rule was needed,” says Tom G. Conway, President of the FLSC. “In March 2011, the matter was referred to the Federation’s Standing Committee on the Model Code of Professional Conduct. The issue is on the committee’s ‘issues list’ and will be considered in due course.”

Law societies have also looked at the issue. In the Law Society of Upper Canada (LSUC) Rules of Professional Conduct, the commentary under Rule 3.3, Justified or Permitted Disclosure, makes it clear that even with imminent financial harm, lawyers are not permitted to disclose to third parties. In the commentary, the rules state that while lawyers should not knowingly encourage or participate in any wrongdoing, “it does not follow that the lawyer should disclose to the appropriate authorities an employer’s or client’s proposed misconduct.”

LSUC, Rules of Professional Conduct, Rule 3.3-1 (confidential information), 3.3-1.1 to 3.3 (justified or permitted disclosure); LSUC, Rules of Professional Conduct, Commentary 5.1 to R. 3.3-1.1 to 3:

“A lawyer employed or retained to act for an organization, including a corporation, confronts a difficult problem about confidentiality when he or she becomes aware that the organization may commit a dishonest, fraudulent, criminal, or illegal act. This problem is sometimes described as the problem of whether the lawyer should “blow the whistle” on their employer or client. Although the rules make it clear that the lawyer shall not knowingly assist or encourage any dishonesty, fraud, crime, or illegal conduct (rule 3.2-7) and provide a rule for how a lawyer should respond to conduct by an organization that was, is or may be dishonest, fraudulent, criminal, or illegal (rule 3.2-8), it does not follow that the lawyer should disclose to the appropriate authorities an employer’s or client’s proposed misconduct. Rather, the general rule, as set out above, is that the lawyer shall hold the client’s information in strict confidence, and this general rule is subject to only a few exceptions. Assuming the exceptions do not apply, there are, however, several steps that a lawyer should take when confronted with the difficult problem of proposed misconduct by an organization. The lawyer should recognize that their duties are owed to the organization and not to the officers, employees, or agents of the organization (rule 3.2-3)) and the lawyer should comply with rule 3.2-8, which sets out the steps the lawyer should take in response to proposed, past or continuing misconduct by the organization.”

[144] United Kingdom: Joan Loughrey, Corporate Lawyers and Corporate Governance, 2011 (“report wrongdoing up the ladder …”); Law Society of England and Wales, Comment to U.S. Securities and Exchange Commission Application of Proposed Rule 205, December 12, 2002 (“An English solicitor is already under an obligation to report internally “up the line” under English law … no solicitor could knowingly assist in a breach of the law”); Solicitors Regulation Act, SRA Code of Conduct 2011; Solicitors Regulation Authority, Ethics Guidance: Disclosure of client’s confidential information, February 5, 2016; The Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017, Financial Services, 2017 No. 692; Bribery Act 2010, c. 23; Judith Seddon and Chris Stott, United Kingdom: whistleblowers and self-reporting, Global Investigations Review, May 25, 2017; Maria Castilla, Client Confidentiality and the External Regulation of the Legal Profession: Reporting Requirements in the United States and United Kingdom, Cardoza Public Law, Policy and Ethics Journal, Vol. 10:321, 2012; Professor Gerry Ferguson, Global Corruption: Law, Theory and Practice – Chapter 8: Advising Businesses on Anti-Corruption Practices, 2d ed. January 2017 (“UK rules on internal and external disclosure of wrongdoing, page 8-23 to 24); Shawn Irving and Sarah McLeod, New corporate criminal liability in the UK for ‘failure to prevent’ tax evasion and other economic crimes: How will it affect Canadian businesses?, Osler, June 2, 2017:

“A ‘failure to prevent’ regime for economic crimes, modeled on the UK Bribery Act 2010, has been proposed as a new way to address corporate wrongdoing and economic crimes. … The new offences, both the new tax evasion offence and the proposed new offences for other economic crimes, are intended to make companies criminally liable if they fail to prevent criminal actions by persons that act on their behalf. Corporate liability for these offences will be strict…..”

[145] Australia: Law Council of Australia, Australian Solicitors’ Conduct Rules (August 2015) –  in place in Victoria, New South Wales, Queensland, South Australia and the Australian Capital Territory, with some minor variations between States (i.e. Rule 9 Confidentiality and 9.2 exceptions); Christine Parker, Suzanne Le Mire, Anita MacKay, Lawyers, Confidentiality and Whistleblowing: Lessons from the McCabe Tobacco Litigation, Melbourne University Law Review, Vol. 40:999, 2017 (Table 3: Exceptions to/Defences for Breach of Obligations of Confidentiality, page 1033-1034); Martin Meredith and Sascha Hindmarch, Keeping the ‘House’ Ethically ‘Clean’, Law Society of South Australia, October 2014:

“A sensible starting point is to ensure that the profession’s own ethical framework reflects the modern reality of practice.   When one teases out in-house legal ethics, and the way in which in-house lawyers should behave and be held accountable, much is assumed but with very little either by way of case law example or regulation underpinning the assumptions.  That, itself, creates its own dilemma and tension.

Take the Professional Conduct Rules as a case in point that, in its current form, arguably is inadequate by failing to reflect the manner in which law is practised in-house and unique issues encountered.  In particular:

• the meaning of ‘client’;
• ‘up the line reporting’;
• withdrawal of representation (i.e. resignation);
• client confidentiality post-employment;
• engaging external lawyers; and
• the ethical standard when acting in a non-legal capacity (e.g. the company secretarial function)

are some obvious examples that are either deficient or non-existent when it comes to the Conduct Rules.  There should be no ambiguity around these and other issues as to what are an in-house lawyer’s duties.  Other jurisdictions (notably the UK, US and Canada) have adapted, or have attempted to do so, to the different ways law is practised today by reflecting this in their Conduct Rules.

Those jurisdictions do not have all the answers.  However, when compared to Australia, these regions have not left their in-house legal profession without adequate guidance in areas specific to practising law in-house.”

[146] Guidance for In-House Counsel on Ethical Decision Making, Australian Corporate Lawyer’s Association, 2013.

[147] Andrew Fleming, Marlo Kravetsky, Andrew Matheson and Sarah Shody, Professional & Ethical Obligations of In-House Counsel in the Securities Industry, Powerpoint Presentation, ACC.

[148] Andrew Fleming, Marlo Kravetsky, Andrew Matheson and Sarah Shody, Professional & Ethical Obligations of In-House Counsel in the Securities Industry, Powerpoint Presentation, ACC.

[149] Deborah L. Rhode, In the Interests of Justice: Reforming the Legal Profession, 2000. Also see, Paul D. Paton, Corporate Counsel as Corporate Conscience: Ethics and Integrity in the Post-Enron Era, Canadian Bar Review, Vol. 84, page 533, 2006.

[150] Gilbert Probst, Six Tips for taking complex decisions at work, World Economic Forum, April 15, 2014. Note: Gilbert J. B. Probst is Managing Director of the Forum’s Leadership Office and Academic Affairs, Dean of the Global Leadership Fellows Programme and responsible for the Open Forum Davos. He is also an award-winning academic. He is Professor of Organizational Behaviour and Management and Co-Director of the Executive MBA programme at the University of Geneva. He also serves as President of the board of Swiss Top Executive Training and on the foundation board of the Swiss Board Institute. He founded the Geneva Knowledge Forum, the Research Center for Public-Private Partnerships and the Centre for Organizational Excellence at the universities of St Gallen and Geneva. He has taught at the Wharton School at the University of Pennsylvania and at the International Management Institute, and has won multiple awards for his research, which focuses on organizational growth and development, and Managing Complexity.

[151] Martin Meredith and Sascha Hindmarch, Keeping the ‘House’ Ethically ‘Clean’, Law Society of South Australia, October 2014.

[152] Martin Meredith and Sascha Hindmarch, Keeping the ‘House’ Ethically ‘Clean’, Law Society of South Australia, October 2014; Cheryl Foy, Build Relationships But Don’t Make Friends, Canadian Lawyer, July 9, 2012. In general, see: Solicitors Regulation Authority v Alastair Brett (unreported, Solicitors Disciplinary Tribunal, Case No. 11157-2013, 17 January 2014); Alastair Brett v. Solicitors Regulation Authority (SRA), [2014] EWHC 2974 (Admin appeal).

[153] Bjarne Tellman, The Importance of Courage for In-House Counsel, Barker Gilmore.com, May 30, 2017; Bjarne Tellman, Building an Outstanding Legal Team: Battle-Tested Strategies from a General Counsel, April 2017.

[154] Martin Meredith and Sascha Hindmarch, Keeping the ‘House’ Ethically ‘Clean’, Law Society of South Australia, October 2014; Alex Newman, Deutsche Bank GC Criticised by German Banking Regulator, Legal Week, January 7, 2014.

[155] Benjamin Heineman, Jr., Avoiding Integrity Landmines, 85 Harvard Business Review 100, 102 (2007). Also see, Constance Bagley, Mark Roellig, Gianmarco Massameno, Who Let the Lawyers Out: Reconstructing the Role of the Chief Legal Officer and the Corporate Client in a Globalizing World, U. of Pennsylvania Journal of Business Law, Vol. 18:2, page 419, 2016.

[156] Constance Bagley, Mark Roellig, Gianmarco Massameno, Who Let the Lawyers Out: Reconstructing the Role of the Chief Legal Officer and the Corporate Client in a Globalizing World, U. of Pennsylvania Journal of Business Law, Vol. 18:2, page 419, 2016.

[157] Cynthia Boeh, Catherine Landman, Alan Tse, Against the Advice of Counsel: Truth or Consequences, Association of Corporate Counsel, 2006.

[158] David B.Wilkins, The In-House Counsel Movement, Metrics of Change, Legal Business World, January 20, 2017.

[159] Martin Meredith and Sascha Hindmarch, In-House Counsel’s Ethical Choice,  Law Institute Journal, Vol. 87, No.3, 2013; Martin Meredith and Sascha Hindmarch, Keeping the ‘House’ Ethically ‘Clean’, Law Society of South Australia, October 2014.

[160] Martin Meredith and Sascha Hindmarch, Keeping the ‘House’ Ethically ‘Clean’, Law Society of South Australia, October 2014.

[161] Constance Bagley, Mark Roellig, Gianmarco Massameno, Who Let the Lawyers Out: Reconstructing the Role of the Chief Legal Officer and the Corporate Client in a Globalizing World, U. of Pennsylvania Journal of Business Law, Vol. 18:2, page 419, 2016; Constance E. Bagley & Eliot Sherman, USG Corporation (C), Harvard Business School Case No. 807-121, at 8 (2007).

[162] Karen Deuschle, Chief Legal Officers Survey results reveal CLO’s biggest concerns, Thomson Reuters, 2017; ACC Chief Legal Officers 2017 Survey, ACC.com (Association of Corporate Counsel), January 2017.

[163] Cheryl Foy, In-house counsel wanted: lawyers without courage need not apply, Canadian Lawyer, February 25, 2013. Also see, Martin Meredith and Sascha Hindmarch, Keeping the ‘House’ Ethically ‘Clean’, Law Society of South Australia, October 2014.

[164] Tom Brennan and Jessica Seah, GSK Case Raises China In-House Questions, The Asian Lawyer, July 29, 2013.

[165] Martin Meredith and Sascha Hindmarch, Keeping the ‘House’ Ethically ‘Clean’, Law Society of South Australia, October 2014.