In-house ACCess : In-house ACCess: Association of Corporate Counsel : ACC : The In-house Counsel Bar Association

(January/February 2012)

In the past, I’ve been asked to serve on panels to discuss upcoming trends in the publishing industry for the following year. I always turn them down. Why? Because I dislike it when people try to predict the future. The audience wants facts, and I cannot provide them since I honestly don’t know what tomorrow will bring. I can tell you what I see now. However, I cannot tell you, in concrete terms, what it will mean a year from now. I can only provide a guess based on my knowledge.

The Dec. 21, 2012, Mayan doomsday scenario has a lot of people talking — especially my children. I remind them to focus on the present; do not obsess over the unknown. Plan and prepare for your future like you have one. It’s good advice, especially coming from someone whose job it is to know what the production schedule will be 18 months out.

Since few of us have the time to ponder whether the world will end as the Mayans predicted, we all have to continue to focus on our 2012 work. The January/February 2012 issue of ACC Docket has a few interesting articles to help in-house counsel do just that: Focus on the facts.

• Mining for Conflict: Sourcing Raw Materials from the Congo
   
• All the King’s Horses … Putting the Value Back into Legal
   
• Public Company Disclosure as a Vehicle for Improving Nonprofit Management
   
• What You Need to Know about the Attorney-Client Privilege
   
• So You Want to Be a General Counsel? How to Maximize Your Chances

It’s now 2012; with a new year, you can expect change. The statement itself suggests change: It’s no longer 2011; it’s 2012. Many people will make New Year’s Resolutions in an effort to change their personal lives. Gyms are crowded with people determined to shed those extra pounds. Don’t be too hard on them … I was in the exact same position last January. That’s the type of change that we can influence, because we work to make the change. However, new publishing trends or the Mayan apocalypse are beyond our control. So, instead of worrying about it, you might as well get back to work.

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Relying at multiple points on an amicus brief filed by the Association of Corporate Counsel and others, the Pennsylvania Supreme Court has returned to the fold and will now apply the attorney-client privilege to confidential communications, in particular, legal advice, from the attorney to the client.  The decision is available here.

   
Prior Pennsylvania court decisions had suggested that only confidential communications from the client to the attorney were protected.  Therefore, an opposing litigant could discover an attorney's legal advice delivered to the client, so long as no confidential information the client provided to the attorney was revealed.  This distinction, which offends common sense as well as the majority rule in the states that both types of communications should be safeguarded, is hard to apply in practice.  As our brief noted:

“The [lower court's] constricted view of the attorney-client privilege requires lawyers, clients, and courts to make surgical separations of communications based on client confidences from communications based on other sources. In practice, drawing such distinctions would be imprecise at best. Determining what documents are privileged will have the practical effect of unnecessarily complicating the court's in camera review of claimed privilege documents and result in affidavits and depositions of attorneys to determine where they obtained the information used as a basis for their legal advice.”

Gillard v. AIG Insurance Co., et al, No. J-58-2010, slip op. at 11 (Pa. S.Ct. Feb. 23, 2011) (citations and internal quotation marks omitted).   And, as our brief in Nationwide Insurance Co. v. Fleming, which was the last time the Court addressed this issue, made clear:

“The [lower court's] holding reduce[s] Pennsylvania's attorneys to guessing when their own legal advice may be privileged, leaves clients uncertain as to when their lawyers' communications are confidential, and, consequently, will significantly disrupt the free and candid exchange of information between attorneys and clients.”

Id. at 9 n.5.

Exactly.  The Court refused to introduce those complications to the discovery process and to the ordinary practice of law.  In-house counsel representing their clients in the Keystone State will now have a more certain privilege on which to rely when they provide candid legal advice. And, a more certain privilege will redound to the company’s benefit by facilitating more informed decision making by the non-lawyers about the constraints and opportunities imposed by legal rules and regulations.  For that, the in-house bar and the client companies those lawyers represent, are quite grateful.

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In Susan Hackett’s blog on the Textron case she states that the privilege is under attack. Let me suggest, at the risk of inspiring disagreement from Steve Bokat, that what is really under attack is the notion that in-house counsel is really practicing law. Susan says as much:

Can anyone out there honestly believe that this case would have been so decided or made it to the US Supreme Court as an ongoing debate if the lawyer providing the advice was an outside lawyer and not an in-house lawyer?

(emphasis added)

You see, if we win we will not have won the debate and the debate will continue because the very brief ACC filed in the Supreme Court undercuts our position. Did I read the brief? No. How can I make such a claim then— because I read what counted— the signature line— and looked at who was Counsel of Record and it was not in-house counsel. And even though Susan was key to the preparation of the brief at the Supreme Court, no one will believe it. If Textron’s in-house counsel was Counsel of Record, Susan’s role would be perceived differently.

The First Circuit opinion is worth a read because it is clear that they did not believe that there was serious anticipation of litigation—the unwritten reason because if you had you had brought in your real trial lawyers—in their mind just routine stuff was going on. Not only is Susan right the result would have been different if it was outside counsel; it would, I suggest, also have been different if Textron in-house lawyers had argued the case.

The other reason we cannot win in court is because this debate has been going on for as long as I have been in the practice of law; I have heard it in my company when business people make comments about who are the real lawyers. And it is a debate that has been going on in ACC since the very beginning—do we do it ourselves or do we let outside counsel do it—those lawyers out there who are always willing to lend a helping hand, but at a cost whether you want to admit it or not. When they co-author an article in the Docket, no one really believes the in-house lawyer really had anything to do with it whether she did or not.

We have a serious image problem and the first step to fixing it is not a favorable decision by the Supreme Court, it is to admit it is there. The second step—is to go on the wagon.

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ACC applauds the Financial Accounting Standards Board (FASB) for moving away from its proposed changes to FAS 5 contingent liability reporting requirements and adopting a more reasonable approach in response to strong opposition from ACC and other bar and business groups.

The Board reportedly plans to issue a final rule that will incorporate the following*:
•    Disclosures about litigation contingencies should focus on the parties, rather than on predictions about outcomes.   
→    This suggests that clients and their lawyers reporting on contingent liabilities would not suffer negative consequences from having predicted unpredictable outcomes.

•    Disclosures about a contingency should be more robust as the likelihood and magnitude of loss increase, and as the contingency progresses toward resolution.  
→    A return to a focus on reporting what is better known and understood as a matter develops is welcomed; the draft’s initial requirement of reporting before any facts were known would have made the disclosures unreliable and left clients exposed when ’guestimates’ inevitably became public and companies were accused of misstating their financial liabilities.

•    Disclosures should summarize publicly available information about a case and indicate where users can obtain more information.  
→    A focus on reporting what is publicly known is crucial to protecting privilege – the initial drafts inferred that reporting should include items that would waive corporate attorney-client privileges and lawyer work product protections.

•    Disclosures about a contingency should not affect the outcome of the contingency – the disclosure is intended to report on which is happening related to the contingency.   
→    Similarly, this result reinforces the previous four, but the focus should be on the contingent liability and not on divulging corporate strategy, privileged legal risk assessments, and lawyer work product.

Further, the revised rule would reinstate organizational respect for privilege and firmly re-assert existing and recognized protocols between lawyers and clients and auditors, based on such longstanding practices as detailed in the AICPA’s “Treaty.”

ACC members and many others expressed strong concerns and opposition to this proposed revision as fundamentally bad policy. We applaud the reported change in direction by FASB

FAS 5 proposals, and comments submitted by ACC and co-signed by 175 general counsel.

* (SOURCE: PWC DataLine briefing, October 9, 2009)

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Greetings friends:  My name is Stephanie Martz, and I am the Senior Director for White Collar Crime policy at the National Association of Criminal Defense Lawyers. Back in the other Washington, I do a lot of advocacy work with ACC on issues such as the federal government's charging policies (demanding waiver of attorney-client privilege, firing "culprits," cutting off lawyers' fees, etc.), vicarious corporate criminal liability, and sentencing.  So I am very happy to be here to check out this amazingly huge meeting and offer some impressions and information.

But first things first:  What shwag!  Well done people!  I have to say that the trout hot mits from Corporate Service Company seemed to be a big hit, and they were high-visibility.  I also got an LED martini glass from Protiviti (my kids will like it for ice cream -- I never touch the stuff -- at least not after last night) , a t-shirt all folded up like a starfish from Steptoe & Johnson, and I won a $50 I-Tunes certificate by spinning the wheel thingie!  That's almost enough scratch to make my I-Pod hip.

Because I can't get enough attorney-client privilege, I think I'm going to check out the "How to Respond to Your Financial Services Agency" panel this  morning, and maybe the crisis management panel after that (criminal defense lawyers are nothing if not crisis managers).  See you there!

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