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It began with an e-mail that any in-house counsel could have written: a reminder to colleagues about the company’s document retention policy. “It will be helpful to make sure that we have complied with the policy,” wrote Nancy Temple, a Chicago-based in-house lawyer for the Arthur Andersen accounting firm, in October 2001. The policy called for destroying documents when they were “no longer useful” for an audit. But coming as it did, just as government inquiries into the Enron Corp. scandal were about to include Andersen, Enron’s accounting firm, the e-mail led to the criminal prosecution and conviction of the accounting giant for destroying thousands of Enron-related documents, and brought about its collapse. Once boasting 28,000 employees, it now has about 200. On April 27, the Supreme Court hears arguments over the meaning of the law under which Andersen was prosecuted, in a case that has sent shudders throughout corporate legal departments and lawyers of every stripe nationwide. “The feeling is, ‘There but for the grace of God go I,’ ” says Stephen Bokat, vice president and general counsel of the U.S. Chamber of Commerce, which filed a brief in the case, Arthur Andersen v. United States. “That memo is the kind of thing lawyers do all the time.” While not addressing specifically the legality of what Temple did when she did it, Bokat asks, “Should it have caused the collapse of a whole company?” Professional organizations from the National Association of Criminal Defense Lawyers to the American Institute of Certified Public Accountants have also weighed in to urge the high court to interpret the law under which Andersen was prosecuted narrowly and to not criminalize routine legal and professional advice. “This case places lawyers at risk of investigation, prosecution, and imprisonment for doing their jobs,” the NACDL warns in its brief to the Court. The brief, written by Robert Weiner of D.C.’s Arnold & Porter, cites as examples that attorneys are now imperiled when they lawfully advise clients not to volunteer information to a grand jury or not to include unnecessary information in a report to the Securities and Exchange Commission. The government, for its part, denies that lawyers will be discouraged from giving proper advice if it wins. In his brief to the Court, Acting Solicitor General Paul Clement recounts the massive document shredding and deleting of e-mails at Andersen that followed Temple’s memos, and he ridicules Andersen’s assertion that Temple’s advice was legitimate, “as if American corporations routinely find it proper to instruct their employees to lay waste to vast troves of documents when a government investigation is viewed as highly probable.” The government claims that Andersen was well aware that an SEC investigation was likely at least a month before Temple sent her e-mail, noting that accounting firm assembled an Enron crisis-response team in September. Not so, says Latham & Watkins partner Maureen Mahoney, D.C.-based head of the firm’s appellate and constitutional practice, who will argue the case for Andersen. She asserts in her brief that while Andersen officials knew that the SEC was likely to seek documents from Enron, they did not become aware of the facts that would lead to an SEC subpoena aimed at Andersen until early November�weeks after Temple’s reminder. The SEC served Andersen with subpoenas on Nov. 9. “There is simply no evidence that Temple believed that there was anything wrongful” about sending the reminder e-mail or a subsequent message that attached a copy of the company’s document policy, Mahoney wrote. THE MEANING OF ‘CORRUPTLY’ Nonetheless, the e-mails triggered the government’s only criminal indictment against Andersen: a form of witness tampering that occurs when one “corruptly persuades” others to destroy documents so as to make them unavailable for an official proceeding. As Mahoney points out, to this day no Andersen officials have ever been charged criminally or cited by the SEC for violating securities laws in connection with their work for Enron. The precise issue before the Supreme Court is whether U.S. District Judge Melinda Harmon of the Southern District of Texas properly instructed the Andersen jury on the meaning of “corruptly persuades.” The dispute, which may send justices and others back to grammar texts, is over whether “corruptly” should be given a transitive or intransitive meaning. Andersen and its allies like the transitive form, which means that to prove the crime, the government would have to show that the persuading was done by corrupt or improper means. Under that interpretation, Temple’s e-mail would not constitute a crime. The government sought, and the judge gave, instructions in the intransitive mode�meaning that the government merely had to prove Andersen had some improper intent of impeding an official proceeding, even if Andersen believed its actions were lawful. The judge also said that under that reading of the law, the government did not have to prove that an official proceeding was under way or even in the works to establish that Andersen committed a crime, so long as Andersen’s intentions were improper. Citing Andersen’s previous problems with the SEC over its audit work for Waste Management Inc. and the Sunbeam Corp., the government argued that Andersen officials had improper intent because they knew an Enron inquiry was looming when Temple sent the e-mail. Even with the broader definition, the jury struggled over the case. It deliberated for 10 days, declaring itself deadlocked at one point. But it ultimately found Andersen guilty. Jurors told reporters that Temple’s e-mail figured prominently in their decision. The verdict and jury instructions were upheld by the U.S. Court of Appeals for the 5th Circuit. That set up a conflict with the 3rd Circuit and the D.C. Circuit, which have given the law a transitive reading. If the 5th Circuit is upheld, says Gregory Garre, head of Hogan & Hartson’s appellate practice, it will not be unreasonable to suggest that virtually any document retention policy that includes throwing things out would be at risk, because making documents unavailable is at least part of its purpose. Garre co-wrote a briefing paper on the Andersen case for the National Legal Center for the Public Interest, set for publication April 18. Its opening line: “General counsel take note: the Supreme Court’s resolution of Arthur Andersen v. United States could have a greater potential effect on your in-house legal operations than any case in recent years.” STAYING OUT, WEIGHING IN Oddly enough, the organization that represents corporate counsel, the Association of Corporate Counsel, did not file a brief in the case. It was not for a lack of interest, says ACC Senior Vice President and General Counsel Susan Hackett. Rather, the association’s volunteer leadership did not sign off on joining one of the amicus briefs in time for the Court’s tight deadlines. “We’re extremely concerned,” says Hackett. “The Andersen case and others tell us you don’t necessarily have to have your hand in the cookie jar to be held responsible.” She said there was some debate in the association about “sending mixed messages” by siding with Andersen, which has become a symbol of recent corporate scandals. But she said the vote to join a brief on Andersen’s side was “overwhelming,” even if late. The array of business and other legal interests before the Court follows a pattern that worked once before with the justices. Andersen advocate Maureen Mahoney two years ago won a key affirmative action case for the University of Michigan. In the Michigan case, a key amicus curiae brief that detailed its wider impact was authored by Virginia Seitz of Sidley Austin Brown & Wood. In the Andersen case, Mahoney recommended Seitz again for the the brief for the Chamber of Commerce and the Washington Legal Foundation. It too speaks of the broad impact on business. “There’s great potential for mischief and for friction between corporate counsel and clients,” says the foundation’s senior executive counsel, Paul Kamenar. “The case will chill corporate counsel from giving advice even when it is purely lawful advice.” The Andersen case asks jurors and judges alike to draw very difficult lines, says Steven Lubet, a Northwestern University School of Law expert on lawyers’ ethics. “It’s a desperately tricky metric to devise,” says Lubet, who notes that he has done consulting work for Andersen in the past. “The death penalty for an international organization is a heavy price to pay for the messages of one or two people,” says Lubet, but he adds that lawyers are not without fault. “Document retention policies are legitimate,” Lubet says, “but when they are articulated with a wink-wink and a nudge-nudge, it can be criminal. Legitimate internal policies can be executed illegitimately.” When do a lawyer’s actions cross the line? “That’s why we have juries,” says Lubet. “They peer into people’s minds. That’s why jury instructions are so important, and why this case is so important.” He adds, “It’s too late for Arthur Andersen. You can’t put the egg back together. But this is a huge case for lawyers. They have to be able to give confident advice to clients.” The ACC’s Hackett and others fit the Andersen case into a broader mosaic of threats to the relationship between corporate counsel and their clients. A recent survey conducted by the ACC and the NACDL of their membership found that an overwhelming majority had experienced challenges to their attorney-client privilege from federal prosecutors and regulators as well as by adversaries in civil litigation. Corporate counsel, says Hackett, have become “a honey pot for every federal prosecutor,” making clients less willing to have candid conversations with them. Stephanie Martz, director of the White Collar Crime Project of the NACDL, agrees: “This not a pleasant time to be a lawyer representing a corporation.” Tony Mauro can be contacted at [email protected].

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