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Close Calls


Lucian T. Pera was an associate when he was assigned to serve as his law firm’s goto guy on ethics matters. So Pera empa­thizes with the plight of the growing numbers of lawyers being designated in-house ethics counsel for their firms or corporate legal departments.

In that role, lawyers must keep abreast of professional conduct rules and perform the delicate task of telling colleagues–often influential partners–that the lucrative case they just lined up raises conflicts issues or other ethics questions that require the firm to turn it down.

“I started doing this at my firm when I was an associate, and you can just imagine,” recounts Pera, who chairs the Committee on Professional Conduct in the ABA Section of Business Law. “There’s no firm where there’s not going to be, occasionally, some pushback, and I was in an awkward position.”

Pera still clearly recalls a tense encounter with a partner over one of Pera’s ethics calls. But “when he started squawking, one of the members of senior management put his foot down,” says Pera, now a partner at Adams and Reese in Memphis, Tenn., whose practice includes advising law firms on professional conduct matters. “That’s the kind of thing you really have to have.”

In the post-Enron environment of growing government scrutiny into business operations, both corporations and law firms are giving more attention to issues such as privileged information, conflicts and other ethics considerations.

While the exact function of ethics counsel varies from firm to firm, and from company to company, the standard role is to help spot ethics issues and tailor appropriate solutions, as well as see that the nutsandbolts procedures, such as conflicts checks and engagement letters, are properly performed.

In-house counsel can help identify ethics issues early on, when they are most easily resolved, experts say. Having a designated ethics counsel also encourages lawyers and other staff members to raise potential issues promptly.

“Everybody who’s ever done this function will tell you that the earlier the report, the better off the lawyer and the firm who may be in trouble,” Pera says. “What you worry about is that nobody is going to bring you the problem until it’s too late.”

But as Pera and others who have served as ethics counsel know, it’s not an easy task. Resolving ethics issues can be complex and involve subtle matters of both substantive law and internal diplomacy. And all too often, the task is assigned to an associate, who must quick­ly develop expertise on the relevant law and find senior members of the firm who will provide the necessary support for their decisions.

Sharing Ideas

A new program sponsored by the ABA’s business law Section is intended to help in-house ethics counsel address these concerns by connecting with their colleagues around the country to exchange ideas and information.

Among its initial efforts, the Firm Counsel Project is sponsoring a series of round tables around the country. Several were held in January and another during the Business Law Section’s spring meeting in March. The next session is June 1 in Chicago during the ABA Na­tional Conference on Professional Responsibility. The project expects to sponsor additional programs at upcoming section meetings.

Meanwhile, the project is developing a contact list and email discussion list to create a virtual national community of lawyers who deal with inhouse ethics issues. The contact list is open to all lawyers, while participants in the email list must be ABA members, Pera says.

“And, frankly, we don’t card people at the door at roundtables,” he adds. (More about the Firm Counsel Project is available at abanet.org/dch/committee.cfm?com=CL290005.)

“My view,” Pera says, “is that the major problem most people in this position have is appropriate support from firm management.” An effective inhouse ethics counsel requires “a culture where management respects what counsel in the firm is doing” and backs that person up, he says.

“You want an open environment where everybody in the firm, from the top rainmaker all the way down” to the newest, least experienced member of the support staff is “willing to come into the ethics partner’s office and say, ‘I think we have a problem here.’ ”

One approach is to pair an associate with expertise and a partner with decision-making authority, says Peter Winders, an ethics law practitioner in Tampa, Fla.

“If you do have somebody who is an academically qualified but inexperienced lawyer,” Winders says, “he or she ought to be working for somebody whose status provides some authority and can stand up to the person who thinks the risk needs to be taken no matter what.”

Opinions differ on how much authority inhouse eth­ics counsel should have. Except for routine conflicts checks and the like, “the better course is to just make a quick phone call to your outside ethics counsel, for the same reason that law firms tell their clients to hire them because they have expertise in a given area,” says Lynda C. Shely, a Scottsdale, Ariz., ethics practitioner and a member of the ABA Standing Committee on Professionalism.

Even if an inhouse lawyer has significant expertise, there are still advantages to calling outside counsel when an ethics issue arises, Shely says. “We know that conversations with outside counsel are privileged,” she says, “and there is a question in some jurisdictions about whether conversations within a firm are confidential if they cause a conflict with a current client.”

Some in-house ethics counsel agree with Shely’s suggestion that their most important function might be issue spotting.

“Most of what we deal with, honestly, is quite routine, just checking something or checking the wording of an engagement letter,” says John P. Ratnaswamy, who serves as ethics counsel in the Chicago office of Milwaukee-based Foley & Lardner. “I think the most common thing is people just wanting to verify that they have analyzed a conflict correctly–and most of the time they have.”

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