State of the Profession Part II: The Fear
Gee: just when you think it couldn’t get any worse or I couldn't be any more depressing...
The former assistant general counsel of Gen Re (the guy who papered the bogus deal between AIG and Gen Re a few years back that led to the eventual ousting of AIG CEO Hank Greenberg) is coming up for sentencing and faces a request by prosecutors that he get more than 200 years in prison. Otherwise known as a life sentence. Put aside whether this guy done wrong for a minute (although not for too long since the courts said he did). He’s facing a longer sentence than folks who do multiple murders at public schools with AK47s and malice. And do let's remember that the most visible CEO in the debacle isn’t facing any time at all, even though everyone on the case (except maybe him) thinks he and leading execs at Gen Re (who are on the perp walk) conceived, implemented, and benefited from the deal.
My point is that prosecutors couldn’t get enough together to charge Greenberg any others who they “know” were likely directing the scam. But it was relatively easier to get the lawyer who papered the deal, especially when all you have to show is not that he profited or schemed, but that he facilitated the fraud and was responsible for stopping it (and didn't).
So here's the fear: that in a time when the public is demanding accountability for failures at companies, that this is how “gatekeeper responsibilities” will be defined for a whole bunch of folks whose companies are going south. You and I might argue with them about whether prosecutors targeting lawyers is the right focus, but let’s go back to story number one above (see, Disgust), and remember how much we’re likely loved for what the public, prosecutors, regulators and our clients see as lawyers' most meaningful contributions in the aftermath of this economic tsunami.
And to further the fear and complicate the frustration, remember: they’re not likely to target some $1,000/hour outside counsel in a firm with average profits per partner of $3.7 mill for the deals gone wrong; they’re coming straight for the $200,000/year in-house lawyer who has a fiduciary gatekeeper role. And who won’t be able to afford the white collar defense counsel he’ll need because outside counsel fees are way out of reach for regular individuals like us. (Planning on coverage under the corporate insurance policies? Most D&O policies won’t cover in-house counsel costs since such policies exclude coverage for licensed professionals, who are deemed responsible for their own conduct and are expected to purchase their own professional liability insurance coverage.)
