What are Some Ethical Issues that an In-House Counsel Face?

An in-house counsel plays a unique role in a company. She is a legal advisor, legal project manager, and legal service provider. Each of these roles have unique demands and require various competencies. In her role, the in-house counsel will face numerous ethical challenges. Most notably, those challenges concern competency of representation, delineating who is the client, and navigating the duty to refrain from participating in (and in some cases reporting) on-going violations. This are the same ethical issues that many attorneys face, thought the issues are particular common for in-house attorneys.

The standards as legal service provider which attorneys practice are generally set by the state bar in which the attorney practices. Each state adopts model rules of professional conduct for its attorneys. They also establish state ethics boards, which have the administrative authority to suspend or revoke an attorney’s license to practice law. As such, these rules serve as the guide posts for determine what conduct is ethical and the standards to apply to any form of legal service or action.

Competency of Representation

Rule 1.1 of the Model Rules of Professional Conduct reads, “A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.” As previously stated, the role of an in-house counsel is extremely diverse. As legal service provider, she provides legal advice on all issues affecting the company as well as provides various forms of internal legal services. Per the rules of conduct, the attorney must be competent in her advice and actions. This requires the attorney to either work to becomes knowledgeable and proficient in a wide range of legal issues, or she must associate competent counsel (either hire or consult with counsel) to make certain she meets the knowledge and competency standards.

Conflicts of Interest in Representation of Company

Rule 1.13(a) of the Model Rules of Professional Conduct reads, “(a) lawyer employed or retained by an organization represents the organization acting through its duly authorized constituents.” This provision indicates and important characteristic of the nature of the counsel’s role — she is the attorney for the organization and not the individual employees or officers. As a legal service provider, she will, of course, provide legal advice to company employees in the execution of their job functions. She does not, however, personally represent the interests of these employees. Her primary duty lies with the company. The in-house counsel may, in certain circumstances, represent a company employee, officer, director, or other constituent, as well as the company. The counsel must make the determination that the interests of both clients are not in conflict. Further, the in-house counsel must disclose the representation to the company and secure approval from the company and the client regarding the dual representation. In the event the interests of the clients become at odds, it may be incumbent upon the counsel to cease representation of either or both clients.

Subsection (f) reads, “(i)n dealing with an organization’s directors, officers, employees, members, shareholders or other constituents, a lawyer shall explain the identity of the client when the lawyer knows or reasonably should know that the organization’s interests are adverse to those of the constituents with whom the lawyer is dealing.” This provision is very important with regard to providing advice to company employees. It is very easy for a company employee to confuse an in-house counsel with their personal attorney. The in-house counsel primarily represents the company. If the interests of an employee are in conflict with those of a company, the counsel may provide notice to the company and its constituents. This is extremely important when the conflicted employee is a senior officer or member of the board of directors.

Taking Part in and Reporting Violations of Law

An attorney may not engage in illegal conduct as part of her representation of a client. In fact, she has an affirmative duty to disclose violations of law that negative affect the company she represents. Rule 1.13(b) of the Model Rules of Professional Conduct provides the standard for an in-house counsel to disclose legal violations. Per this provision, the attorney must make the determination of whether a violation of law by a company employee, in fact, hurts the company’s (or its constituents) interests. She must take steps to report those violations to company officials who can take steps to remedy those violations. If the company officials fail to take actions to remedy the violations, the attorney can disclose to the company’s constituents the violations. These disclosure provisions do not apply when the company is being investigated for criminal violations.

LawTrades Understands the Role of In-House Counsel

Hiring or employing an in-house counsel is unique from many other types of employees. There are all sorts of legal and practical considerations. If you are hiring or looking for a new in-house counsel, don’t go it alone. The legal professionals at LawTrades understand well the role and obligations of an in-house counsel. We know the Model Rules of Professional Conduct as do all of our attorneys. They can assist you identifying, evaluating, and ultimately hiring a counsel.