Corporate Counsel in the Crosshairs

In regulatory and criminal investigative matters, an in-house attorney often faces a dilemma – how to balance the duty of loyalty to the corporation against the duty of care if he or she finds out about corporate missteps. The author analyzes the case of an associate general counsel at a leading pharmaceutical company who handled a letter from the FDA requesting information about the marketing of a drug, and ended up facing criminal charges.

The charges did not include an allegation that she was involved in the underlying conduct that gave rise to the investigation. They related only to her actions in conducting an internal investigation and her subsequent response to the government inquiry. The question was whether she intentionally misled the government or was merely advocating for her client.

There is a safe harbor provision in the federal obstruction of justice statutes that explicitly states that providing lawful, bona fide legal advice in connection with, or anticipation of, an official proceeding is not prohibited. But if a company asserts an advice-of-counsel defense, it is required to divulge the advice counsel gave and waive its privilege.

The current regulatory environment, which includes enhanced awards to whistleblowers, warrants extreme care as corporate counsel weigh the risks and responsibilities of good stewardship to their employer. The author cautions that it’s a bad idea to provide any information before all the facts relating to an inquiry have been assessed internally.