2007 Issue 1 - New York City Bar Association

L A W Y E R ’ S R O L E I N C O R P O R A T E G O V E R N A N C E
target for regulators may cause investigative counsel to advocate future
actions by corporate clients that are not necessarily in the shareholders’
interests, but rather formulated to preserve investigative counsel’s reputation
for thoroughness.
If such a disagreement does arise, the lawyer needs to defer to the
client’s decision-making authority, assuming it involves no unethical or
illegal course of action. The lawyer cannot allow his or her self-interest,
such as concerns regarding his or her reputation, to interfere with vigorous
representation of the client’s interests. 222 With adequate consultation
and a clear retainer agreement before the investigation proceeds, such
tension between investigating counsel and the client should be a rare
occurrence.
When counsel does withdraw, regulators should not necessarily draw
any inference from the withdrawal. As is true with all other difficult issues,
handling corporate investigations requires the exercise of judgment.
No two corporations are exactly alike and no two investigations are exactly
alike. Investigative counsel should be sufficiently flexible to apply
judgment to the facts presented by the engagement and help the client
safeguard its best interests. Great lawyers may counsel non-cooperation
just as they may counsel cooperation. A corporation devoted to corporate
compliance may chose not to cooperate in a particular instance just as a
corporation with lax ethics might decide that it must cooperate in a different
instance. What is called for is honesty; care and thoroughness in
the areas that are investigated; and tough and unconflicted advice. The
best lawyers—and those who are recognized as the best at promoting good
corporate governance—have those characteristics.
If the foregoing is true, then the decision of counsel to withdraw or
the decision of the client not to continue with counsel need not be understood
to be a red flag with respect to cooperation. Counsel may withdraw
because the client wants him or her to cooperate and counsel thinks
that is unwise, or counsel may withdraw because he or she wants to coop-
CEO, outside counsel, and Fortune magazine, in which outside counsel characterized Lucent’s
fraudulent booking as a “failure of communication,” where interview occurred after Lucent
and SEC had already agreed to settle); cf. Michael Bobelian, Ex-General Counsel Pleads Guilty
in Case of Securities Fraud, N.Y.L.J., Sept. 23, 2004, at 2 (former General Counsel of Computer
Associates concealed information from law firm conducting internal investigation:
United States v. Woghin, 04 CR 847 (E.D.N.Y.) (ILG)).
222. See DR 5-101: lawyer shall not accept or continue employment “if the exercise of
professional judgment on behalf of the client will be or reasonably may be affected by the
lawyer’s own . . . personal interests . . . .”
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