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Retaliation claims are a fast-growing category of employment-related litigation. Lawyers who work in-house also are employees and thus arguably covered by statutes protecting workers from discrimination, retaliation and wrongful discharge in the same manner as other employees. Such claims, however, implicate special legal and ethical issues. The lawyer’s right to sue a current or former employer must sometimes take a back seat to the client’s right to choose counsel and the lawyer’s ethical obligations to a current or former client. The special issues raised by lawyer-employees in employment litigation include the following: � The lawyer’s special fiduciary relationship and ethical obligations; � The lawyer’s duty of loyalty: A lawyer-employee’s pursuit of claims of wrongdoing against his client may in some cases be in conflict with the duty of loyalty to his or her client. Because of the unique position lawyers hold, a higher degree of loyalty may be expected than in standard employment relationships. In Jones v. Flagship International (1986), the 5th U.S. Circuit Court of Appeals found that counseling or soliciting other employees to sue and publicly criticizing the company violate a lawyer-employee’s duty of loyalty or related ethical obligation to his or her client. In that case, the lawyer who managed the client’s Equal Employment Opportunity programs was lawfully discharged for soliciting others to join in EEOC filings and a class action suit. � The lawyer-client privilege and confidentiality; and � The client-employer’s fundamental right to choose its own lawyer. Courts may be especially deferential to the employer’s subjective choice in retention of counsel given the nature of the employment relationship in question. When a lawyer-employee acts in opposition to the company, that act may be used as a nondiscriminatory reason for termination. The state of the law in this area is highly unsettled, but the developing law seems to focus on the issues of protecting client confidences and the fiduciary relationship. In a 5th U.S. Circuit Court of Appeals case, Douglas v. DynMcDermott Petroleum Operations Corp. (1998), the in-house counsel for DynMcDermott alleged unlawful retaliation. According to the opinion, Kordice Douglas claimed that a letter she wrote criticizing DynMcDermott’s alleged racism, sexism and retaliation qualified as protected opposition activity. The letter contained confidential information and was disclosed to persons outside of the office. DynMcDermott terminated Douglas for this reason, the court noted. In footnote 16 of Douglas, the 5th Circuit said, “[A]n attorney who violates her profession’s ethical rules is not entitled to any damages flowing from retaliation taken by her employer-client because of her violative conduct.” The 5th Circuit in Douglas relied on a balancing test set forth in Hochstadt v. Worcester Foundation for Experimental Biology (1976) to determine that Douglas’ activity was not protected. The test requires a court to weigh the employer’s right to run her business against the employee’s right to express a grievance. The court held that disclosure of the client-employer’s confidential information is not protected by Title VII of the Civil Rights Act of 1964. The court in Douglas held that the plaintiff could not bring suit because disclosing confidential information does not constitute a protected activity. The court noted that some activity, although fairly characterized as protest of or opposition to practices made unlawful by Title VII, “may nevertheless be so detrimental to the position of responsibility held by the employee that the conduct is unprotected.” The court did not discuss whether the plaintiff could have pursued her claim had she established that she was engaged in protected activity. HIGHER STANDARD? In some retaliation cases, the lawyer-employee may not need to rely on confidential information to make his or her claim. As the 3rd Circuit stated in Kachmar v. SunGard Data Systems (1997), “[I]t is difficult to see how statements made to [an in-house attorney] and other evidence offered in relation to her own employment and her own prospects in the company would implicate the attorney-client privilege. It is also questionable whether information that was generally observable by [plaintiff] as an employee of the company, such as her observations concerning the lack of women in [defendant's offices], would implicate the privilege.” While the language in this case is confidential, in actual practice, distinctions between confidential and nonconfidential information may not be so clear. In Willy v. Coastal States Management Co. (1996), the 1st Court of Appeals in Houston held that in-house counsel may bring a wrongful-termination suit (alleging retaliation for refusing to commit an unlawful act) under the Sabine Pilot exception to the at-will doctrine “if the claim can be proved without any violation of the attorney’s obligation to respect the client confidences and secrets.” Even if the lawyer-employee can bring a retaliation suit, his or her claims may be subject to a higher standard of proof. The 7th Circuit held in Rand v. CF Industries Inc. (1994) that the employer’s “decision to fire one of its attorneys must be given special deference.” The court in Rand reasoned that “[a]n attorney’s age discrimination claim against his employer requires careful scrutiny because ‘the relationship between attorney and client is based on trust and cannot function unless the client has complete confidence in his or her attorney.’ “ This case law demonstrates the difficulty courts have, and will continue to have, in this area. Courts are struggling to find a balance between an in-house lawyer’s arguable statutory protections as an employee, and the ethical and legal duties those attorneys continue to owe their former employer and client. Where that balance will ultimately lie, and the resulting impact on the in-house attorney-client relationship, is difficult to predict.

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