� Stephen Gillers, vice dean and professor, New York University School of Law: That depends: How serious is the purported wrong; how detailed is the accusation? What does the general counsel know about the employee making the accusation? Depending on the answers to these questions, a GC should begin by talking directly with the employee, if identified. If the allegation is anonymous and the charge serious and sufficiently specific, then the GC should begin an informal inquiry. Talk to others who may know what is going on. Look at records. Depending on what is uncovered, the GC either should continue looking into the matter or close the file. The GC’s duty is to protect the client, that is to say the company, no matter whose toes are stepped on.
� Nell Minow, editor, The Corporate Library: The GC should show that letter to the inside auditor, the outside auditor, the CEO and the audit committee. He should warn the audit committee’s members that they have the authority to retain their own counsel and their own auditors, if they feel that is necessary. It [also] matters how credible the allegation is. The anonymous letter Enron vice president Sherron Watkins sent to president Kenneth Lay in August warning of a “wave of accounting scandals” had a great deal of credibility. It sounded well informed and important. I would err on the side of following up. Later, Watkins made herself known. And I would not be willing to dismiss any allegations from someone at her level — even if the GC’s first inclination is to think the claims are not legitimate. Also, even if a GC believes the allegations will not be supported, he needs to make the fact of the allegation known to the relevant parties, and he must let them know that he’s following up.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.
For questions call 1-877-256-2472 or contact us at [email protected]