In-House Lawyer’s Professional Duties vs. Rights as an Employee Joseph J. Ortego New York, NY / Long Island, NY

2 Tough Times for In-House Lawyers

3 Failure to Speak Up and Report Mintz, Accounting and Auditing Enforcement Act Release No. 2925, 2009 WL (January 26, 2009). - Jordan Mintz – Former VP/General Counsel, Enron - Rex Ryan, Former VP/Associate General Counsel, Enron

4 Backdating Options

5 Failure to Report Leads to Punishment Lubben, Exchange Act Release No. 2939, 2009 WL (February 19, 2009). - David Lubben – General Counsel, United Healthcare Group

6 Lawyer – Gate Keeper Must Speak Up Stephen M. Cutler, Former Director of SEC Division of Enforcement [ ] “[T]oo many examples of lawyers who twisted themselves into pretzels to accommodate the wishes of company management...”

7 Lawyers Owe a Duty to Speak Up for Others Former SEC Chairman Christopher Cox March 8, 2007 [ ] “... [I]n the securities realm, lawyers are what today we call crucial gatekeepers responsible for safeguarding shareholders’ interests…”

8 Lawyers Owe a Duty to Speak Up for Others, cont’d Former SEC Chairman Christopher Cox March 8, 2007 [ ] “…The misconduct in these cases, which requires certain access to records, as well as authority to grant options, raises the question – where were the lawyers?...”

9 Tell All, or Put Up and Shut Up? A Lawyer’s Code Former Code of Professional Responsibility Rules: ›DR 4-101: Preservation of Confidences and Secrets of a Client. ›DR 5-108: Conflict of Interest - Former Client. ›DR 5-109: Organization as a Client New Rules of Professional Conduct: ›Rule 1.6: Confidentiality of Information ›Rule 1.9: Duties to Former Clients ›Rule 1.13: Organization as a Client

1 0 The Client’s Confidentiality Old DR Preservation of Confidences and Secrets of a Client New RULE 1.6 Confidentiality of Information

1 Duties to Former Clients Old DR Conflict of Interest - Former Client New RULE 1.9 Duties to Former Clients

1 2 Who is the Client? Old DR Organization as a Client New RULE 1.13 Organization as a Client

1 3 Cashing In…. US ex rel. FLPA v. Quest Diagnostics, 2011 U.S. Dist. LEXIS (S.D.N.Y. Mar. 24, 2011) (Robert P. Patterson, U.S.D.J.)

1 4 The Facts The Court first stated that the FCA does not preempt state ethical rules and held that DR 5-108(A) precluded Bibi’s participation as a relator. After analyzing Bibi’s conduct under DR (“future crime” exception), the Court concluded that while Bibi may have reasonably believed in 2005 that Defendants had this intention, his disclosure went beyond the scope of the exception. Accordingly, the district court held that: – dismissing against Bibi alone was insufficient; and – dismissing Unilab as a defendant was insufficient. US ex rel. FLPA v. Quest Diagnostics, cont’d

1 5 Where is the Line? NY Rules of Professional Conduct permit in-house counsel to disclose client confidences in very few circumstances. Given Rule 1.6’s stringent restriction on disclosure of client confidences, think long and very hard before attempting to cash in on client misconduct. If an attorney strays too far, his/her conduct could be punishable.

1 6 Can Ms. GC Reveal Confidences When She Personally Benefits? Hypothetical Former General Counsel (Ms. GC) commences an action against her former employer (ABC), asserting three causes of action: 1. violation of an internal whistleblower policy; 2. claim of sex discrimination; and 3. claim for an ERISA violation based upon ABC’s alleged imprudent treatment of investments. All of these claims were only asserted well after Ms. GC’s termination.

1 7 Conclusion Stay Ethical! Follow your Heart and Conscious – Never Your Pockets