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When the U.S. Department of Justice charged former in-house lawyer Lauren Stevens with six felonies, it aimed to send a clear message that no one should lie to federal investigators—including lawyers. But the short and bitter trial that followed backfired. In the end it conveyed a message to both in-house counsel and prosecutors about the dangers of overzealousness. On May 10, in a move that was as sudden as it was dramatic, a federal district court judge in midtrial acquitted the former in-house counsel at GlaxoSmithKline of all six counts. While Stevens and her lawyers celebrated with champagne, sources say the stunned prosecutors privately complained that the jury would have found Stevens guilty had the judge let the trial continue. Maybe this will change their minds. When U.S. district court judge Roger Titus informed the jury in private that he had taken the case out of its hands and declared an acquittal, the jurors stood up and applauded. “This jury was very appreciative that the case went the way they wanted it to go,” says Colleen Conry, one of the defense attorneys in the case and a partner at Ropes & Gray in Washington, D.C. Whatever the jury thought, the case was a bruising experience for Stevens as well. And it holds several lessons for in-house counsel—not the least of which is to keep your outside counsel close. The indictment of Stevens last November sent a shock wave through the in-house bar. Federal investigators had been probing possible off-label marketing at Glaxo’s U.S. unit in Durham, North Carolina. But Stevens wasn’t accused of taking part in that. Instead she was charged with trying to obstruct an inquiry into the marketing of the depression drug Wellbutrin because of how she responded to investigators’ questions. In other words, Stevens was zealously defending her company. And there was a sigh of relief when she was acquitted, says Susan Hackett, general counsel of the Association of Corporate Counsel. The outcome “reaffirmed an important principle upon which every lawyer must rely—that they will not be charged with obstruction because they defended their client,” Hackett says. The case against Stevens may have involved big principles, but it began innocuously. A letter from the Food and Drug Administration in the fall of 2002 asked Glaxo broad questions about the marketing of the drug. The company assigned Stevens to head up a legal team of in-house and outside counsel—which included two former FDA lawyers—to gather facts and voluntarily respond to the FDA. Over the next several months, she wrote a series of letters in response, but always with the input and approval of outside counsel from King & Spalding, led by partner Mark Brown, who declined to comment for this story. The involvement of Brown, former associate chief counsel of the FDA, proved crucial. The gist of Stevens’s response to the FDA was that Glaxo wasn’t doing anything wrong. Then a whistle-blower showed the government slides from a Glaxo speaker’s promotion that indicated otherwise. That’s when the FDA turned the case over to federal prosecutors. The company has not been charged, but a federal investigation into its practices is ongoing. The tone of the investigation changed when prosecutors discovered that Stevens knew more than she had told the FDA. Evidence showed that she was aware that at least 28 doctors, some paid up to $500,000 a year by Glaxo, were giving lectures that promoted off-label uses. She warned the speakers. She also obtained slides from the talks, but didn’t turn them over to the FDA, as requested. But perhaps the most damning evidence was a spreadsheet with a missing column. In response to a question about compensation for doctors, including those who attended these presentations, Stevens said attendees weren’t compensated. But, according to court testimony, she removed a column from the spreadsheet that showed otherwise. It listed expenses for lavish gifts and entertainment, including golf and ski outings, for attendees. The defense argued that Stevens didn’t think those counted as “compensation.” Prosecutors were infuriated by Stevens’s omissions. In his opening trial statement, Justice Department attorney Patrick Jasperse lashed out at Stevens’s “lies and deception.” He described her as “a lawyer who went too far . . . breaking the law by lying to a federal agency and by covering up and concealing incriminating evidence.” Prosecutors declined to comment for this story. But John Wood, a former U.S. attorney in Missouri who was not involved in the case, says prosecutors can become “particularly aggressive” if they feel a defendant has lied to them or altered a document. “That may help explain why the government continued to pursue this case even after the court expressed skepticism before the trial,” says Wood, now a partner at Hughes Hubbard & Reed in Washington, D.C. But did the government go too far? Reid Weingarten, the Steptoe & Johnson partner who led Stevens’s defense team, repeatedly accused the government of overzealousness. Jasperse’s opening, Weingarten said in court, “was an angry statement full of allegations of corruption and obstruction,” but not backed up by the evidence. He also thinks assistant U.S. attorney Sara Bloom went over the top. In an interview, Weingarten describes Bloom as “going nuts, she was a wild woman,” as she argued against acquittal. For Weingarten, the key to the case was understanding what lawyers do in “the real world.” Lawyers who deal with federal agencies and with government discovery and document requests “don’t get” why Stevens was charged, he said in court. In the real world, he added, “if we had 12 lawyers and they heard the evidence, there would be a two-second acquittal.” That argument enraged Bloom. She accused Weingarten in court of saying that in the real world, it’s okay for lawyers to be dishonest. (He later said that’s not what he meant.) “I think a number of lawyers are saying if she did what’s alleged here, that’s crazy, that’s a crime,” Bloom said. Bloom also complained that the judge hadn’t let the jury see certain documents. One was a Glaxo memo praising Stevens and the legal team for getting the FDA to take enforcement action against a competitor for engaging speakers who promoted off-label uses of drugs. Bloom said Glaxo was doing the same type of marketing at the same time. And she said Stevens knew it. The evidence showed that when Stevens found out that Glaxo speakers were doing the same thing, she still told the FDA that the company was clean. This was “absolutely evidence from which a jury can find intent to deceive,” Bloom said, “and intent is a quintessential jury issue.” Most of all, Bloom argued, the case should go to a jury of nonlawyers. “For the perception of fairness . . . a corporate lawyer who has made statements contrary to the information she provided should be judged by a jury of the people” and not by another lawyer, Bloom told the judge. But Titus disagreed. For the first time in more than seven years on the bench, the judge directed a verdict before ever hearing a defense witness. His ruling can’t be appealed. “Even if some of [Stevens's] statements were not literally true,” the judge said, “it is clear that they were made in good faith, which would negate the requisite element [of intent] required for all six of the crimes charged in this case.” Stevens’s reliance on outside counsel at King & Spalding played a huge role in the decision. To Titus, it showed she had no intent to commit a crime. “There really is something important in this case going on with respect to whether people can practice law and feel free to not only receive information but to give information . . . without fear that the lawyer is going to suddenly become a criminal defendant,” Titus said. “I mean that, to me, is a profound question of public policy affecting the judicial system.” The indictment was part of a tough government trend targeting individuals. The government has been skewered in recent years for letting corporations, especially big drug companies, repeatedly pay record fines and then treat the penalties as a cost of doing business [ "Half-Baked Justice," January]. In March 2010, FDA commissioner Margaret Hamburg publicly called for increased prosecution of “responsible corporate officers” for company wrongdoing. And Wood notes that Justice Department officials have begun seeking “real jail time” for executives as a way to change corporate cultures. “DOJ officials are of the strongly held view that corporate fines, no matter how large, are not enough of a deterrent,” explains Wood, who is also a former deputy associate attorney general at Justice. Does the verdict mean in-house counsel can relax? Not at all, say experts on both sides. For one thing, there were special circumstances, including a very sympathetic defendant. Stevens, 61, is a petite, soft-spoken, and universally liked defendant. Most of the prosecution’s own witnesses praised her. While testifying that Stevens planned to lie to the FDA if asked about the speaker slides, a Glaxo paralegal broke into tears because she said she cared about Stevens so much. Stevens was prepared to take the stand and confront the prosecutors if the trial had continued, her lawyers say. The case also had murky facts. Yes, Stevens withheld some information that could be “incriminating,” but outside counsel agreed that she legally could. Her defense pointed out that her responses to the FDA were voluntary. And even the prosecution’s star witness, a Glaxo vice president of marketing who was granted immunity from prosecution, had mostly positive things to say about Stevens. Weingarten later called him “my best witness.” Another key factor was the judge. Titus seemed to have doubts about the case almost from the beginning. In a rare move, he let the defense see transcripts of normally secret grand jury proceedings. When defense lawyers objected to what prosecutors told the grand jury about the advice of counsel, the judge agreed with them. He dismissed the indictment and forced the government to reindict. Titus also criticized the government for going after attorney-client records that were privileged. Prosecutors used evidence from privileged documents that were produced under an order of a magistrate judge in Massachusetts. That judge cited the crime-fraud exception to the privilege. But Titus disagreed, saying the crime-fraud exception didn’t apply. He explained, “GlaxoSmithKline did not come to Ms. Stevens and say, ‘Assist us in committing a crime or fraud.’ It came to her for assistance in responding to a letter from the FDA.” He said bluntly, “Access should not have been granted to [the records] in the first place.” He warned, “There are profound implications for the free flow of communications between a lawyer and client when the privilege is abrogated, as it was in this case.” In the end, Titus hammered the government in his ruling. “I believe that it would be a miscarriage of justice to permit this case to go to the jury,” he said. “I conclude that the defendant in this case should never have been prosecuted, and she should be permitted to resume her career.” Then he shot one last dart at the prosecutors. Speaking not about this case, but similar ones, Titus noted that a bar subcommittee on criminal justice has “received complaints of prosecutors harassing members of the defense bar, and that vigorously and zealously representing a client is not a basis for charging an offense [of] obstruction of justice.” Still, the resounding victory for Stevens is not likely to embolden other in-house counsel to move into the gray area between zealous advocacy and obstruction of justice. For one thing, says Conry from Ropes & Gray, no one wants to go through what Stevens did. She lost her job and four years of her life. Brien O’Connor, a partner of Conry’s, agrees that the government made a spine-chilling point even though it lost. “The fact that the government went to trial on these facts is a deterrent to all in-house counsel,” he says. The case may also serve as a check on prosecutors. “Judge Titus demonstrated the judiciary’s skepticism of such cases,” notes ex-U.S. attorney Wood. “So I would not be surprised if the ruling gives prosecutors pause before charging attorneys for their role in responding to government inquiries—unless the facts are particularly egregious.” See also: “Why Didn’t the Maryland U.S. Attorney Sign the Lauren Stevens Indictment?” , from CorpCounsel.com, June 2011.

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