Robert Weber
This essay was adapted from a speech he gave at a convocation on lawyer independence jointly sponsored by the New York State Institute on Professionalism in the Law and the New York State Judicial Institute. Read "General Counsel are One Conscience of the Company," a rebuttal to Weber's speech by former General Electric GC Ben Heineman Jr.
I recently gave a speech on the issue of lawyer independence, particularly as it applies to corporate counsel. Having practiced law for nearly 40 years, as both an in-house and outside counsel, I certainly have views on this topic, some of which may be within the legal mainstream, others less so. Either way, the independence of in-house counsel has been under scrutiny for some time, and the issue remains worthy of careful and critical examination.
Before I set forth my own observations, I want to distinguish between the terms "independence" and "objectivity." Lawyers know that our advice must be independent in the sense that it must be given to our client free of improper influence or inappropriate external considerations, including, perhaps especially, personal considerations. We also know that we are not wholly independent from our client, because we are professionally obliged to represent our client's interest as fully as the law permits. On the other hand—and here is a difference that makes a difference—lawyers have a special responsibility to maintain a sense of professional objectivity, and avoid becoming intoxicated by the enthusiasm of our clients for a certain result. With that in mind, let me set out four basic propositions:
- I reject the notion that in-house counsel are under greater threat to independence than lawyers at outside firms. I do not believe that objective data supports that notion, nor is such an assertion consistent with my experience.
- One real threat to the perception of in-house counsel's independence comes from in-house counsel themselves—by too quickly referring controversial or high-profile matters to outside counsel.
- The general counsel does have a unique role to play in the C-suite. I'll offer thoughts on what any senior in-house lawyer should do to demonstrate that he deserves to be a full participant in the company's senior deliberations.
- Finally, I will set forth my objections to the assertion, often recited these days, that in-house lawyers are there to serve as the conscience of the corporation. There are many roles for the general counsel to play. Being the corporate Jiminy Cricket is not one of them.
Let me start with my belief that in-house counsel are under no greater threat to independence than lawyers at outside firms. In saying this, I am not minimizing the threats to an in-house lawyer's obligation to render independent legal advice. Those threats are real and lurk in many places. Rather, I am rejecting the notion that the threats are demonstrably greater than those presented to other lawyers.
In fact, these concerns are neither limited to in-house counsel nor are they new. To illustrate, let me quote Felix Frankfurter, who penned a memoir more than 50 years ago that included a richly descriptive portrait of how a lawyer can lose his professional soul in service to a demanding client. Regarding a railroad tycoon and the "boot-licking deference" paid by his cadre of lawyers, he wrote: "If it means that you should be that kind of a subservient creature to have the most desirable clients, the biggest clients in the country, if that's what it means to be a leader of the bar, I never want to be a leader of the bar. The price of admission is too high."
As we know, the private bar's loss eventually turned into a gain for academia and the judiciary. But Frankfurter's broader point is perfectly valid today. In our day the most commonly cited argument about the threat to independence for the in-house lawyer is also the least critically analyzed argument, and that is the claim that the in-house lawyer cannot be independent or objective because he is employed by one and only one client, with his livelihood dependent on that client. This is a theme one sees repeatedly; it was the argument adopted by the European Court of Justice in the Akzo Nobel Chemical case, where that court held that Europe's version of the attorney-client privilege did not apply to in-house counsel because attorney independence was lacking.
Here in the United States, this claim is often found in the literature unaccompanied by empirical evidence, and purportedly supported by comparisons to the outside lawyer who, it is said, is in a meaningfully different position because she can better spread her employment risk across multiple clients. I respectfully disagree.
In large law firms, where lawyers have so-called books of transportable business, their financial future depends upon their ability to retain this business. It directly affects their compensation, their power in the firm, and is their vehicle for moving from one firm to another in search of a higher payout. For these lawyers, their employment risk is not at all diversified; it is highly contingent upon their ability to retain the work of a core group of clients. Indeed, firms of all sizes now employ metrics against partners, assessing their revenue generation. And even putting money aside, what lawyer wants to lose a client once gained?
We who are in-house are in no way immune from threats to independence, but these threats are not rooted in our employer. Whether we are speaking of independence to render advice, or mediate disputes in the executive ranks, or halt wrongdoing, the real threat comes from within. Is our in-house lawyer so concerned about her position, her executive status, or her compensation that she dare not venture a contrary opinion and becomes, in Justice Frankfurter's vivid term, a "subservient creature"? Is our outside lawyer, in a firm large or small, so concerned about her clients and partners in the law firm that she does not risk giving unwelcome advice? Is the senior associate on track to make partner prepared to say no to the client on whom his advancement may depend? Is the solo practitioner in a small town prepared to bear the town's opprobrium for a controversial representation?
These and countless similar examples make plain—to me, in any event—that it is not the employer or the partnership or size of the law firm that affects the lawyer's independence. It is more mundane motives of the type laid bare centuries ago by the likes of Sophocles and Shakespeare—motives such as human pride and selfishness. These observations are neither original nor new, and they are surely not limited to those who practice law. We could quote any of the great philosophers or religious leaders, but I'll quote only two of my favorites. The Roman poet Horace wrote: "He will always be a slave who does not know how to live upon a little." For a modern perspective, listen to Upton Sinclair: "It is difficult to get a man to understand something, when his salary depends on his not understanding it."
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Caroline Schroder
The inclination or the perceived need for counsel to act as 'company conscience' surely varies with the perceived 'tone at the top', There have been more than a few companies where a conscience in the board room and the C-suite could have made the difference between solid performance and fraud, or at least solid performance and 'irrational exuberance'. The 'tone at the top' does not necessarily trickle down and it is not beyond reason to have one top officer and reporting department committed to understanding cost-benefit analysis and profit but consciously defending the line between right and wrong just in case the 'tone' lacks fiber and the accounting gets slick,
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