In-House Counsel Ethics

When it comes to ethical guidance, in-house lawyers get the short end of the stick. The Model Rules of Professional Conduct (the "Rules"), which most U.S. jurisdictions have adopted in some form, are more compatible with law firm practice than in-house work. Although a handful of Rules, such as Rules 1.11, 1.12, and 3.8, single out government lawyers for special attention, in-house lawyers are not so fortunate. Not only must they figure out how to adapt the Rules to a corporate environment for which many of those Rules were clearly not designed, but they must do so with little assistance from ethics opinions and CLE programs. (There are some notable exceptions, such as NYCBA Formal Op. 2008-2 ("Corporate Legal Departments and Conflicts of Interest Between Represented Corporate Affiliates") and ABA Formal Op. 99-415 ("Representation Adverse to Organization by Former In-House Lawyer"). Yet, as noted below, even those opinions cannot address all of the unique complexities raised by in-house counsel conflicts of interest. Of the scores of ethics panels I have been invited to speak on over the years, only one was titled "Ethics for In-House Counsel." In-house lawyers are like the proverbial "square pegs" trying to navigate the "round hole" of legal ethics.

The primacy of the traditional law firm model is reflected in the terminology used throughout the Rules. For example, the conflict of interest rules provide that an individual lawyer's conflict is imputed to all other lawyers "associated in a firm." Rule 1.10(a) (emphasis added). What constitutes a "firm"? In common parlance, a firm generally means a private entity comprised of attorneys who provide legal services to outside clients. Yet, Rule 1.0(c) defines a "firm" or "law firm" as "a lawyer or lawyers in a law partnership, professional corporation, sole proprietorship or other association authorized to practice law; or lawyers employed in a legal services organization or the legal department of a corporation or other organization." (emphasis added). Thus, corporate legal departments (and by extension in-house lawyers) are simply appended to the definition of a law firm, despite the fundamental differences between those two practice models. This lack of delineation can raise bewildering questions for in-house lawyers who try to apply the Rules to their own conduct.

Again, the conflict of interest rules provide a ready example. As noted above, individual conflicts are imputed to all lawyers "associated in a firm." In many cases, the clients can waive the imputed conflict, but some conflicts are unwaivable under Rule 1.7(b). In a law firm context, this does not usually present an insurmountable obstacle. A client with an unwaivable conflict can hire another law firm. But what does a corporation do when its general counsel or other in-house lawyer has an unwaivable conflict - short of firing them? One may argue that such a scenario is...