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Acknowledgments iii
Table of Cases xiii
Scenario I Who’s the Client? 1
1
A. Principle of Confidentiality 1
B. Counsel’s Communications with the Client’s Constituents 2
C. Closely-Held Enterprises 3
D. The “Entity” Rule 6
E. “Reasonable Expectation” Standard 6
F. Avoidance of Conflicting Interests 8
1. Attorney as Intermediary 8
2. Steps to Minimize Conflicts and Liability 9
Scenario 10
Scenario II Confidentiality Owed to Existing and Former Clients 15
15
A. A Business Enterprise as the Client—Going-Up the “Ladder” 16
B. Counsel Communicating with Corporate Constituents 18
C. Attorney Withdrawal from the Representation 18
D. Attorney’s Duty of Confidentiality—Varies by Jurisdiction 20
E. Unacceptability of “Ostrich” Approach by Counsel 23
F. Communicating with Prospective Successor Counsel 25
Securities and Exchange Commission v. Spiegel, Inc. 25
United States v. Tamman 30
Hays v. Page Perry, LLC 32
Scenario 36
Scenario III The Lawyer as Intermediary 39
39
A. Attorney Acting as Intermediary—Conditions Required 39
B. Situations When Counsel Acting as Intermediary Appropriate 40
C. Consequences of Attorney as Intermediary 41
Scenario 43
Scenario IV Corporate Internal Investigations: What About Confidentiality? 47
47
A. Lawyer-Client Confidentially in the Corporate Setting 47
B. Purposes of Internal Investigations 50
C. Components of an Internal Investigation 51
D. Quasi-Miranda Warnings 52
In the Matter of KBR Inc. 57
In Re Kellogg Brown & Root, Inc. 61
Scenario 65
Scenario V Parent-Subsidiary Related Party Transactions 71
71
A. Concerns with Dual Representation: Parent-Subsidiary Transactions 71
B. Counsel’s Ethical Duties Intertwined with Substantive Law 73
1. Entire Fairness Standard 74
2. Establishment of Special Committee 76
C. Relation Between Counsel’s Duties and Substantive Law 78
D. Permissibility of Dual Representation if Conditions Met 79
E. Counsel’s Liability Exposure 80
In re Dole Food Co., Inc. Stockholder Litigation 81
Scenario 83
Scenario VI The Corporate Opportunity Doctrine and the Lawyer’s Role 87
87
A. Corporate Opportunity—Overview 87
B. Presenting the Opportunity to the Corporation 88
C. Tests for Determining a Corporate Opportunity 89
Scenario 97
Scenario VII The Multiple Representation Dilemma for the Business Attorney 99
99
A. Ethical Concerns—Multiple Representation 99
B. Situations Where Multiple Representation Concerns Arise 101
1. Derivative Suits 102
2. Government Investigations and Proceedings 105
C. Joint Defense Doctrine 107
In re Rossana 110
Scenario 115
Scenario VIII Screening and the Personally Disqualified Attorney 119
119
A. Simultaneous Representation 120
B. Successive Representation 120
C. Vicarious Disqualification of Law Firm—Imputation Concerns 121
D. “Screening” the Disqualified Attorney 122
E. Conflict Dilemmas—Simultaneous Representation 122
F. Conflict Dilemmas—Successive Representation 125
G. Recognition of Screening to Avert Firm-Wide Disqualification 128
H. The Former Government Lawyer—a More Lax Standard 132
Cromeans v. Morgan Keegan & Co., Inc. 134
Galderma Laboratories, L.P. v. Actavis Mid Atlantic LLC 137
Scenario 149
Scenario IX Business Attorney as Litigator in Corporate Settings 151
151
A. Application of Model Rules 151
B. Filing of Frivolous Claims 152
1. Basis in Law and Fact Not Frivolous 153
2. Degree of Inquiry Reasonable 155
3. Good Faith Argument for Modification of the Law 157
C. Discovery Abuse 160
1. Broad Range of Discovery 160
2. Propriety of Discovery Tactics 161
D. Decision-Making Between Counsel and Client 164
E. Termination of Attorney-Client Engagement 166
Kayne v. Grande Holdings Limited 168
Scenario 172
F. The Litigation Privilege 174
1. Attorney Fraudulent Conduct 175
2. Application to Non-Litigation Settings 175
Scenario 185
Scenario X Lawyers Taking Equity Interests in Their Clients 187
187
A. Applicable Ethical Standards 189
1. Requirement of Reasonableness 189
2. Conflicts of Interest Prohibition 190
3. Business Transactions with a Client 191
B. Considerations for Law Firm Fees Paid with Stock 192
C. Application to In-House Counsel 193
Scenario 194
Scenario XI Inside Counsel 197
197
A. Inside Counsel—“Wedded” to His/Her Client 198
B. Challenges Facing Inside Counsel 199
1. Client Identification 199
2. Duty to Inquire 201
3. Dealing with “Suspected” Employees 204
4. Inside Counsel’s Liability Exposure 205
5. Role Within the Boardroom 206
6. Law Compliance Role 207
C. Insider Trading 209
Exxon Mobil Corporation v. Hill 210
Scenario 213
Scenario XII Counsel as Director? 215
215
A. Potential Drawbacks of Legal Counsel as Director 216
B. Benefits of the Dual Role 217
C. Due Diligence by the Prospective Attorney-Director 218
D. Ethical Rules 219
E. Risks of Serving as Attorney-Director 220
F. Law Firm Assessment of Benefits/Risks 228
G. Suggested Alternative 229
Scenario 229
Appendix 231
231
Engagement Letter (Example 1) 231
Engagement Letter (Example 2) 237
Multiple Representation Letter—Intermediary 240
Multiple Representation Provision 242
Waiver of Conflict Letter 244
Termination of Engagement Provision 245
Joint Defense Agreement 246
“Tips” to Avoid Malpractice 247
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