In-House Counsel

Really, VW? Part Two.

What to do when catastrophe strikes your company.

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When faced with unethical behavior, what is counsel to do? The Bar rules mandate all sorts of activities that could be taken, and particular corporate rules also dictate what should be done. Heck, even the DOJ and SEC Enforcement teams are simply doing their jobs when counsel is called to task for improprieties; but let’s look at the practicalities shall we?

You have done time in the trenches of Biglaw, you may have clerked, and you made the jump in-house. You may be married, with kids and a mortgage and a fairly decent lifestyle. Now, you are faced with a potential calamity — someone at your company, high enough to tank your career, has done something so utterly stupid that your mind is blown. As you sit contemplating your future in the few minutes you have before taking the next step, the thoughts come crashing like so many waves. You have choices, and the one you alone make may well determine your fate for the coming years.

One, do nothing, and hope that this all blows over; no one gets caught, no harm no foul, right? Wrong, you have an ethical duty to the company to ensure that this hiccup by a major executive (and likely at least part of her team of reports) needs to be stopped. Now.

Depending upon the severity of the issue — let’s take a CEO’s knowledge of emissions switches that can be turned on and off, and that may have caused over 60 deaths — you need to assist in protecting your client (the company). There isn’t time to worry about your job, this is a high stakes fallout situation. This issue could result in fines, terminations, resignations, falling share price, shareholder litigation, loss of your own job, and much more.

My first call is to the most trusted outside counsel that I know. It needs to be clear that this is in anticipation of retaining him, and in anticipation of likely litigation, so privilege and work product attach. I need advice, fast. This is my preliminary step, taken as soon as I can see dire long term effects. Some of you will disagree stridently with this, but I don’t like to act on my own in bad situations. I’ll likely be doing enough on my own very soon, and I’d like some comfort that I am not crazy, that I am following the necessary process in the ethical way, and whatever the outcome, I can rest knowing that I did my best to properly tackle the problem. Keeping the issue outside the company for an hour or two, and confidentially, can assist you in taking the right steps in the right order.

Depending upon your company, you’re going to have to report the issue to others, you’re going to have to wall yourself off with the proper people, and you’re likely going to have to confront the wrongdoer. None of which will be comfortable or easy; but it is all necessary. When the fan inevitably gets hit, you will want to have acted with all your cards showing, recorded, and kept safe, for the inevitable investigation and potential litigation. The severity of that investigation can be tempered by an above board showing of actions taken in good faith by your team; or the team that ultimately works the case. Any discovered sign of holding back is only going to cause more widespread trouble.

The final outcome is not predictable. You may or may not retain your position; you may not want to. But, you are not in jail, you haven’t been called out in the press as personally responsible, and you may even come away wearing a white hat. Hard to say. But that’s why we get paid the big bucks — right?

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A keynote speaker from a major corporation once stated that every counsel should go through a catastrophe once in their in-house career. Like a first time parent taking a class to prepare to deal with a child’s choking, I think about such things, wonder whether I am truly prepared to handle such a situation, and hope that when my time comes, I do the right thing.

David Mowry is Senior Counsel to a large technology company. The views expressed do not necessarily reflect the company’s position or opinion on issues raised herein.

David is a former litigator, two time federal clerk, and former Chair of the Association of Corporate Counsel’s New to In House Committee, and is available for speaking engagements. If interested, you may reach him at dmowry00@gmail.com.

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