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Declaration of Independence
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 handand here is a difference that makes a differencelawyers 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:
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 plainto me, in any eventthat 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 Shakespearemotives 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."
Sadly, some of our professional colleagues have lost sight of who we are, and why we do what we do. Regardless of where we work, our bulwark against a loss of independence must be our sense of professionalism. We are and must remain a profession that, in its roots, is engaged in a public service; and which is, as dean Roscoe Pound said many years ago, "no less a public service because it may incidentally be a means of livelihood." (That word, "incidentally," is pregnant with meaning.)
Now perhaps because I had good mentors who gave me more attention than I deserved, I was taught that lawyers always need to be prepared to be fired. I was told that, in any long legal career, there would inevitably be times when a client would fire me, and that I should always be prepared to bear whatever the consequences would be. Over time, there were indeed occasions when clients did not like my advice, times when they simply chose not to follow my advice, and some few occasions where I was never clear why they switched lawyers. But in all these situations, I always went back to the definition of what it means to be an attorney. The very word "attorney" has its roots in the concept of agency, the lawyer being a special kind of agent in the areas defined by our professional rules. The client is the principal and the lawyer is the agent, with the principal free to discharge the lawyer for good reason, bad reason, or no reason.
In my time at IBM, I have been privileged to work with two extraordinary CEOs, and I had this very conversation with each as we began our relationship. I explicitly confirmed that my client was the company, and that the CEO was free to fire me for good reason or no reason, with notice or without, at whatever time they decided they would like a different lawyer. To them, it communicated that I understood clearly who was the principal. And for me, it was a declaration of independence of sorts, demonstrating that I had no expectation other than that I would give them my best effort and advice, and that I would do so fully prepared for whatever the consequences might be. In neither case did we ever touch on the topic again.
My second point is that at times in-house lawyers act as if they do not believe they can be independent. Every day we see examples where an allegation or claim arises, and in-house counsel or the board retains external counsel to do an "independent investigation." Now there are certainly times when an outside counsel may be advisable and even necessary because of the demands of a regulator, or in light of unique issues of perception, or where management finds the in-house staff to be feckless. But there are also many cases where the general counsel should be fully prepared to manage the inquiry herself, make the tough calls herself, and take on the responsibility herself.
I analogize this to the judicial doctrine of a court's duty to sit; and while the analogy cannot be stretched too far, I think general counsel have a duty to do our jobs in highly charged and controversial matters. Indeed, in tough times our obligations may be at their greatest. There have been any number of high-profile issues involving questionable CEO behavior in recent years, and while in many cases the tasks were quite rightly outsourced to external counsel, there were also a good number where a courageous general counsel managed the situation herself, and let the facts determine the results.
The long-term best interest of the client should provide the guiding principle for how matters of this type should be handled. Obviously if the general counsel were implicated or involved in any way, the decision to go outside would be clear. But all too often we see a reflexive referral when allegations of corruption are made. It is easy to say that a task demands an outside voice, when what it really needs is a courageous voiceone prepared to grapple with difficult issues and to live with the consequences of doing so.
Let me move to my third point and describe traits that make for a successful senior in-house lawyer. A good place to start is recognizing that body of literature, both thoughtful and substantive, that has arisen in the past few years regarding in-house lawyers in general, and the general counsel in particular. We must of course acknowledge the work of Ben Heinemanwork that almost by itself forced both business leaders and their lawyers to acknowledge the special characteristics of the role of the in-house lawyer. These thought-provokers have argued quite rightly for a broad acceptance of the general counsel as a full partner at the leadership table in public companies. Heineman's arguments are surely familiar, so all I will note is his basic assertion that the first question a general counsel must address is: Is it legal? And the general counsel then needs to be a full participant in the follow-up: If it is legal, is it right?
But no general counsel takes his place at the senior table merely because of his title. Like everything else in the profession, a place at the senior table is earned over time by developing trust. The topic of how trust is earned is a rich one, worthy of another discussion, but let me offer up four basic rules for earning your place as an essential adviser to your company:
1. Never lose your discipline or your willingness to get your fingernails dirty.
It can be tempting for a general counsel to stay at a level of 30,000 feet, and live in the world of "it depends." Tempting, but wrong. A modern general counsel must be prepared to be the master of the pertinent facts. If you have as good a grasp on the facts as possible, you can leave the world of "it depends" and use your maturity and judgment to give the client meaningful advice.
2. Always make sure to separate your legal advice from your business advice.
The client deserves your very best legal advice, in crisp fashion and with only so much detail as necessary. Then offer your nonlegal advice, again in clear terms, taking care never to conflate or confuse the two. When these two become intermixed, the legal advice moves from the realm where it must be listened to, to another realm where your voice is robbed of its uniqueness and becomes but one of many.
3.Always be objective in your analysis, but never confuse your objectivity with independence.
This is a point I touched on earlier, but it bears repeating. As an in-house lawyer, your opportunity to offer objective analytical advice may well be unique among your peers. You are, by training and position, able to examine an idea from all sides. Your advice must always be cold-blooded as regards the facts, accepting them for what they are and never assuming they are what you wish them to be. You must maintain this objective foundation, even though you are not independent in the sense that you do in fact represent your client, and must do so with zeal.
4.Finally, always remember who the client is and be an advocate for the best long-term interests of your client.
Just as the conflation of legal advice with business advice easily entraps many in-house lawyers, so too do many lawyers cause themselves much trouble by forgetting who the client is. Your client is the company, period, full stop. Not the business leader you counsel, not the business unit you advise, not the transaction on which you work. In my years of practice I can say with certainty that more trouble, consternation, and ruined careers have come from violating this one rule than any other.
Now, let me touch on the final topic: This new notion that the general counsel should be the conscience of the company. Everyone now accepts that the general counsel should be an essential adviser at the senior executive table. As with many good ideas, however, this description has become, for some people, merely a launching point for a very different and more expansive vision.
Like the proverbial frog in the hot water who does not realize his peril until it is too late, I think that some of these descriptions of the general counsel will, by increment, create a distorted set of expectations that may actually diminish her voice. Consider Ben Heineman's belief that the in-house counsel should be a lawyer/statesman. I confess to being slightly uncomfortable with this notion, but I can accept that term insofar as it attempts to capture the idea that the general counsel can play a special role as the executive suite's honest broker. After all, a trusted general counsel is often the natural intersecting point for the resolution of disagreements among other senior executivesnot only because the CEO often views such disputes with all the enthusiasm of a parent asked to resolve a fight between children about crayons, but also because the other executives come to the general counsel in what they believe is a protected, perhaps even privileged, context.
My discomfort increases considerably, however, with those who describe the modern general counsel as the "guardian of corporate integrity," primarily because I have no idea what that means. And I explicitly part company with those who now assertand there are manythat the general counsel serves as "the conscience of the company."
Few concepts could be as destructive to the lawyer's right to sit at the senior table as to place around the lawyer's neck the millstone of being the company's "conscience." And even more debilitating would be the senior team's perception that a general counsel actually believed it, or even worse, acted like it. I cannot imagine what it would be like to act that way, but it certainly takes no imagination for me to say that if I did, my tenure as general counsel would be short-livedand justifiably so.
This notion of being the company's conscience is flawed in so many respects that it is hard to know where to start, but let me try. First, despite appearing to be the product of modern thinking about the lawyer's role, it actually reflects the long-rejected thinking of lawyers as some elite group of illuminati or philosopher kings, dispensing rules and prescriptions to the benighted. It reflects a lawyer-centric view that assumes we have special insight into, or perhaps even a monopoly on, ethical rights and wrongs.
There is nothing in my training as a lawyer that makes me better or worse suited on matters of conscience than any other senior leader at my company. For me to claim such a position, or pretend to take such a role, would give rise to well-founded resentment and criticism from my peers. At the senior table at our company I see a number of gifted men and women, each of whom has, among other positive attributes, a well-formed conscience and a personal compass well attuned to our company's values and beliefs. They need me to be many things for many reasons, but serving as their conscience is most definitely not one of them.
I am in no way eschewing a lawyer's ethical responsibility, nor am I ignoring the fact that legal ethics are often wholly consistent with broader ethical principles. I am merely recognizing that when it comes to business or societal ethics, a lawyer is but one voice, and not necessarily the authoritative voice. The company's ethos, its moral compass, should be ingrained in every person and every function, as part of the corporate DNA. Everyone is part of the institution's moral construct, and everyone is responsible for the execution of the company's values.
Robert Weber has been IBM's general counsel for the past seven years. Before moving in-house, he spent 29 years in active trial practice at a large law firm. 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.