How To Avoid Being GM’ed: The Wrongs and Rights of Clients and Lawyers

A general malaise?

A general malaise?

The GM internal-investigation report  about ignition-switch problems raises a host of issues, one of which is its unusually sharp criticism of GM internal lawyers.  Criticism of lawyers is nothing new, of course.  Lawyer-jokes always blame lawyers; lawyers’ spouses frequently blame lawyers; clients sometimes blame lawyers.

But public reports drafted by lawyers infrequently blame lawyers, so this one merits attention, most especially by internal lawyers in large organizations; by the outside counsel who serve them; and by the businesspeople who are the true clients.

 

What are the key takeaways?

The Normal, Uneasy.   Skim the report.  (Just skim it — it’s too long to read cover to cover without heroin.  If you have heroin, you have other issues besides ignition recalls and attorney ethics).  On a practical, professional level, what’s your reaction?

One reaction is, Not much.  It is remarkable how normal the actions of GM’s outside counsel and internal lawyers seem, and how characteristic of the operation of large organizations that are at once diffuse, sprawling and “siloed” (to use the term du jour).  Anybody who works in or serves a large organization will recognize the course of events, the mis-allocation (or absence) of resources, the personal dynamics and the outcomes described the GM report.  Despite expressions of editorial shock and Congressional indignation, the lawyer-narrative laid out in the GM report is, in many important ways, more normal than aberrant.

 

Advising on this quarter's numbers.

Advising on this quarter’s numbers.

The Uneasy Normal, Uneasier.  Prepare for a change in the public perception — and, perhaps, in regulation — of commonplace concepts of attorney-client privilege and the general confidentiality of lawyers’ work.  Prepare also for a coordinate change in internal-lawyers’ reporting obligations within the corporation.  Perceptions of  lawyers are mixed, and we should generalize with caution, but jury consultants regularly note the suspicion and distrust with which lawyers are viewed —  especially lawyers for big companies.  Elsewhere, we have explained how laypeople see corporate counsel as mob lawyers.

 

 

Preparing for summer hearings.

Preparing for summer hearings.

Summertime, and the Congressional Livin’ Is Easy.  Congress is composed of laypersons who are political animals and who are no great respecters of privilege and confidentiality.  As a former oversight-and-investigations lawyer for a House committee, I can testify: summer is the high season for O&I hearings.  Nothing is going on legislatively, O&I hearings don’t require lobbyists or constituents, it is hot as hell but most House and Senate hearing rooms have good air-conditioning these days and, if you get some hearings under your belt in June and July, you’ll have plenty as a Member to talk about in your district or state.

It is by no means inconceivable that bills will be introduced seeking to impose, in GM-like situations, a Sarbanes-Oxley style “reporting” requirement on internal lawyers (or outside counsel, or both), coupled with a “private attorney general” concept and whistleblower bounties.  As in the SOX, internal-investigation world, if the matter is sufficiently serious, you may need two law firms: one firm that does an investigation and prepares a report that we all know will end up in the hands of the Government, and one firm that provides advice to the company (or the board, or a committee of the board) and over whose work we hope to maintain privilege.  We have addressed internal investigations and related problems before.

[Full disclosure moment: My law firm does a lot of products-liability work, all of it on the defense side (that is, on behalf of the people who make the products that allegedly cause the complained-of injury).  We are not involved in the matters described in the report, but we have in the past represented and continue today to represent automotive manufacturers.  I do little products work; the primary way I judge a car is by its air-conditioning.  Nevertheless, consider my biases as you read].

 

Doubts about who the client is?

Doubts about who the client is?

A change in the way we view lawyers and their roles.  We may be faced with an evolving re-definition of that law school chestnut: Who is the client?  Is the client now the Government?  This is a critical threshold question. In the narrative laid out in the GM report, the “client” of the internal lawyers and of the outside counsel is not the government, or a government agency or a regulator.  The client is not the buyer of a GM car or the passenger in a GM car.  The client is not a Member of Congress, an editorial writer or a blogger.  The lawyer — at least while she or he is acting as counsel — owes a duty only to the client, a client which, in this situation, is a non-natural person called a “corporation.”

Professor Peter Henning is generally right on the money with regard to white-collar matters, but he jumps the gun when he so quickly blames lawyers in this kind of situation:

 

In the aftermath of the savings and loan scandal, Judge Stanley Sporkin asked how a once-prominent financial institution could engage in a pattern of misconduct. “Where were the professionals when these clearly improper transactions were being consummated?” he asked.

For General Motors, the negligence and incompetence that resulted in at least 13 deaths and multiple injuries from a faulty ignition switch is equally troubling. Numerous lawyers were on the scene, but none took responsibility for making sure their client did not continue to keep defective cars on the road.

Most people, when they pay for a lawyer, want that lawyer to be their lawyer and not someone else’s.  Indeed, that concept of loyalty is a foundation of the conflict-of-interest rules (rules, by the way, far more demanding than what is considered normal in the marketplace).  Under current law and rules, and with few exceptions, lawyers internal and external have neither a duty nor a warrant to serve multiple masters simultaneously.  The most relevant provision is Rule 1.13  (“Organization As Client”) of the ABA Model Rules of Professional Conduct, which are restrictive about what a lawyer representing an organization may and may not reveal.

Even the “reporting up” obligations, which are limited, are focused on the client:

If a lawyer for an organization knows that an officer, employee or other person associated with the organization is engaged in action, intends to act or refuses to act in a matter related to the representation that is a violation of a legal obligation to the organization, or a violation of law that reasonably might be imputed to the organization, and that is likely to result in substantial injury to the organization, then the lawyer shall proceed as is reasonably necessary in the best interest of the organization. Unless the lawyer reasonably believes that it is not necessary in the best interest of the organization to do so, the lawyer shall refer the matter to higher authority in the organization, including, if warranted by the circumstances to the highest authority that can act on behalf of the organization as determined by applicable law.

This question is distinct, of course, from what is wise, merciful or sane from a business or spiritual standpoint, and one could make an argument that losing track of the ignition problem was “likely to result in substantial injury to the organization.”  But if the question is, Where were the lawyers?, the answer is, They were right there.

 

A file too far.

A file too far.

A Forest-and-Trees Cliche.  In future litigation, if wholesale problems still get lost in the retail landscape, they will imperil your job.  If the GM report is accurate, there was never a genuine “visibility” problem about the ignition switch.  “Visibility” was not the problem.  “Irritability” was the problem.  Lawyers tend to deal with the irritant at hand; they put out the fire first that is closest and hottest.  They are trained to do so — first in law school, by “spotting issues” instead of looking at a scenario as a whole, and then in private practice, with the demarcation of work into mostly fenced-off fields (called “cases”) and of compensation into fractions of time (called “tenths of an hour”).  In addition, for internal lawyers, a combination of too many demands, insufficient resources and a corporate focus on the monthly or the quarterly has the same grinding effect.  An in-house friend, a accomplished lawyer at a large corporation with a good reputation, says that her only criticism of her job is that she never — ever — has time to actually think.

So what, as a practical matter, can we do — internal lawyers, outside counsel and businesspeople?

Grow Real Ethics.  There is no substitute for actual ethics, opposed to consultant-thick compliance programs and ever-muddied regulation.  We have written on the compliance versus ethics problem before.

Senior Citizens Unite.  Older lawyers – internally and externally — have to speak up.  Young lawyers lack professional and financial traction, as noted in at least one instance in the GM report.

 

Team A v. Team B

Team A v. Team B

Be A Spook.  When faced with “serial” litigation, try the CIA Team B approach of pitting two teams — one internal, one external – against each other on the same topic or issue.  (Outside law firms are useful for this exercise, if there is money in the budget).  As a way of addressing the Soviet strategic threat, Team B has had many critics, but alternative, competitive thought is always worth considering (and is always more expensive).

Misery Loves Company.  Outside lawyers are proficient at CYA.  Consider ways to put your outside law firms more firmly on the ethical hook.

 * * * *

Without the right budget and the right approach, none of this may matter, but give it some thought.  By itself, the fact that we all believe that we are serving our clients won’t keep us from getting “GM’ed.”


Cocktails and Crime: Martini Quiz, Vermouth Ratios, Posner v. Holmes, New Gins and Crime Conventioneers

As is customary on Friday, a few White Collar Wire notes on cocktails and crime fiction.

National Martini Day (courtesy Bar Louie)

National Martini Day (courtesy Bar Louie)

June 19 was “World Martini Day.”  Seriously.  The London Telegraph posted a martini quiz.  How deep is your see-through knowledge?  Here is the first question:

Q.1
The martini, a mix of gin and vermouth with a lemon twist or olive, is one of our most famous cocktails, but its history is cloudy. Which one of these is not a legend about its origin?

 

Two by two.

Two by two.

 From the CBS ManCave, a detailed discussion of the gin/vermouth ratio:

You stir dry vermouth and gin with ice then poured into a chilled cocktail glass. The amount of vermouth has gone through two distinct stages of reduction. The first was the increasing quality of the ingredients, so you didn’t need to bury the bathtub aspects of the gin. The second is the decreasing quality of some drinkers, who think that forgetting one ingredient of a two ingredient cocktail is somehow sophisticated. There are people right now with “Left” and “Right” written on their shoes, and even when they get that wrong they’re still doing better than the people who call a glass of gin a martini because they’ve at least remembered both of the relevant items.

As it should be.

As it should be.

The very reliable Emily Arden Wells at Gastronomista  (@xxGastronomista) sets out the gins you should be drinking:

There’s a lot of really exciting stuff happening in the gin world right now, and I love that gins are becoming more expressive and flavorful.  Companies are playing with flavors such as peaches, lemongrass, sage, and douglas fir, and the results are amazing.  The new diverse range of flavors in these different gins welcome new flavor combinations and innovative cocktails!  All of these gins are so gorgeous, they don’t need much dressing up, a simple martini with a complimentary garnish will do the trick!

From our friends at crime-fiction blog The Rap Sheet, two posts.

Richard Posner

Judge Richard Posner

First, writing for the United States Court of Appeals for the Seventh Circuit, Judge Richard Posner finds that Sherlock Holmes no longer enjoys copyright protection.  In his trademark style, Judge Posner notes:

 The estate asks us to distinguish between “flat” and
“round” fictional characters, potentially a sharper distinction
than the other one it urges (as we noted at the beginning of
this opinion), which is between simple and complex. Repeatedly
at the oral argument the estate’s lawyer dramatized
the concept of a “round” character by describing large circles
with his arms. And the additional details about Holmes and
Watson in the ten late stories do indeed make for a more
“rounded,” in the sense of a fuller, portrayal of these characters.
In much the same way we learn things about Sir John
Falstaff in Henry IV, Part 2, in Henry V (though he doesn’t actually
appear in that play but is merely discussed in it), and
in The Merry Wives of Windsor, that were not remarked in his
first appearance, in Henry IV, Part 1. Notice also that Henry
V, in which Falstaff is reported as dying, precedes The Merry
Wives, in which he is very much alive. Likewise the ten last
Sherlock Holmes stories all are set before 1914, which was
the last year in which the other stories were set. One of the
ten, The Adventure of the Veiled Lodger (published in 1927), is
set in 1896. See 2 William S. Baring-Gould, The Annotated
Sherlock Holmes 453 (1967). Thus a more rounded Holmes or
Watson (or Falstaff) is found in a later work depicting a
younger person. We don’t see how that can justify extending
the expired copyright on the flatter character. A contemporary
example is the six Star Wars movies: Episodes IV, V, and
VI were produced before I, II, and III. The Doyle estate
would presumably argue that the copyrights on the characters as portrayed in IV, V, and VI will not expire until the
copyrights on I, II, and III expire.

The estate defines “flat” characters oddly, as ones completely
and finally described in the first works in which they
appear. Flat characters thus don’t evolve. Round characters
do; Holmes and Watson, the estate argues, were not fully
rounded off until the last story written by Doyle. What this
has to do with copyright law eludes us. There are the early
Holmes and Watson stories, and the late ones, and features
of Holmes and Watson are depicted in the late stories that
are not found in the early ones (though as we noted in the
preceding paragraph some of those features are retrofitted to
the earlier depictions). Only in the late stories for example
do we learn that Holmes’s attitude toward dogs has
changed—he has grown to like them—and that Watson has
been married twice. These additional features, being (we
may assume) “original” in the generous sense that the word
bears in copyright law, are protected by the unexpired copyrights
on the late stories. But Klinger wants just to copy the
Holmes and the Watson of the early stores, the stories no
longer under copyright. The Doyle estate tells us that “no
workable standard exists to protect the Ten Stories’ incremental
character development apart from protecting the
completed characters.” But that would be true only if the
early and the late Holmes, and the early and the late Watson,
were indistinguishable—and in that case there would be no
incremental originality to justify copyright protection of the
“rounded” characters (more precisely the features that
makes them “rounder,” as distinct from the features they
share with their earlier embodiments) in the later works.

Not Richard Posner.

Must re-read that opinion.

One doesn’t normally get Holmes, Watson, Star Wars and Falstaff in federal courts of appeals opinions (especially within five hundred words of one another).
 

Second, again from The Rap Sheet, here are insights about this year’s annual Bouchercon crime fiction convention, to be held in November in Long Beach.


A Meditation On Father’s Day

My father.

My father.

            At age 53, I am now one year older than my father was when he died. 

            For many years, I rarely thought of Daddy.  Primarily, I thought about him every January 6, the anniversary of the day he died. Annually, this is a day upon which my mother and I have the same conversation, rehearsed and hushed.  I loved him, and one might expect me to have thought of him more often, to have honored him, but I did not, at least not until recently.  Before you draw too many conclusions, though, bear in mind that I could not see him clearly.

            Have you ever looked through the wrong end of a telescope?  The object at which you gaze looks tiny, and slightly blurred at the edges.  The object – a tree, a person – is as impossibly distant as the moon is impossibly close when you turn the telescope right way around.  When my father died, I had just turned twelve.  Although precocious in some ways, I saw him with a child’s eyes, and never after that did my eyes change, at least the eyes with which I saw him.  Time passed; I aged, and everything around me changed and aged; but not the eyes with which I struggled to see him.  Time passed, but my eyes for my father remained unchanged, a child’s eyes in man’s body.  I went further and further down the wrong end of the telescope.

            It was only when I became a father, and then approached his death-age and surpassed it, did I understand a little better who he was, and that I could quicken with memory that tiny figure moving in sepia grace at the wrong end of the telescope.

            Memory is a treacherous thing, and no less so than between father and son.  The danger is in adopting someone else’s memories – my mother’s, for example, who is aged but singular in her devotion to Daddy.  My own memories, though, I need to sift and poke through.

Baskin-Robbins

Baskin-Robbins

He was a CPA, but he and his brother also owned an ice-cream store, a Baskin-Robbins at a mall (which, in Tuscaloosa, Alabama in 1970 was as fancy as some Ben and Jerry’s superpremium exotic would be today).  At times, we would skip church on Sunday morning so that he could go to the store and take inventory.  The mall was empty and silent, and the walk-in commercial freezer blew out white cold air like some massive Antarctic creature.

One night, he and I went out to the mall on a store-errand.  I was probably ten.  A conservative man, both politically and financially, my father drove a Volkswagen Beetle.  The evening was warm, and I cracked my window to let in a breeze.  We got out, went to the store, came back to the parking place and discovered the car gone.  Although I had dutifully locked the car door, I had failed to roll the window back up completely.  At the time, in the twilight of the hippies, “dune buggies” were in great demand.  (Admit it – When was the last time you heard of a dune buggy?)  Volkswagen Beetles were ideal to be stripped-down and turned into dune buggies, the police told us.  They theorized that the thieves had been able to slip a twisted metal coat-hanger into the gap in the window I had left open; pull up the lock; and gain access.

           

A dune buggy

A dune buggy

           I was embarrassed, devastated and fearful at the prospect of forcing my father to pay for a new car, even if insurance was available.  (He had taken a staff job at the University of Alabama which, I figured out later, paid less than his previous, private-company job).  He never got mad about the Beetle, never blamed me and never considered it anything other than an unfortunate event.  I was grateful and did not know how to express my gratitude.

            Gratitude is not my strongest quality, and there were other things for which to be grateful.  There was a trip to Acapulco: we played tennis, and the breakfast pancakes had Mexican chocolate in them.  My tennis career was budding, and he hired a contractor to build a cinder-block backboard on one side of the driveway, painted dark green the way I imagined the high walls at Wimbledon might be.  There was a beach trip to Destin, Florida.  The motel where we stayed had a bar and, one afternoon when I went to get some ice from the sweating ice machine, I passed the bar.  The band was rehearsing: “Jeremiah Was A Bullfrog,” by Three Dog Night.  Also, Daddy had been a high school basketball player, and he encouraged my (undistinguished) play in the downtown YMCA youth league.

            That was the day he died, the Saturday of a Y basketball game.  The day was cold and clear.  He watched my game and brought me home (in yet another Beetle, this one green).  After my shower, I built a fire in the coal grate.  (An oddity, coal fires, but the house was old and the fireplace built for coal.  Some people do not like coal fires.  As a child, I loved them.  Pockets of gas would escape and explode in blues and purples around the black coals, demons escaping from rock).

            Daddy had complained of nausea and went to lie down in my parents’ bedroom.  I got the fire into a good, colorful roar.  The demons were looking good.  My mother must have known how impressed I was with my fire-making skills, and she helped my father up to the living room to see my handiwork.  Something was amiss.  Even I knew something was amiss when all he could do – he who was usually so effusive in praise for me – was to nod and murmur something I do not remember.

            He went back to the bedroom, I went back to watching the purple and blue demons crack and jump from coal to coal.  There was a commotion, my mother cried out and I ran down the hall towards their bedroom.  No Daddy.  My mother was saying something about He fell, and she was on the phone.  My words and hers all run together now.

            Whereishe?

             Inthebathroom.

            I stood there, rooted, terrified.  I did not know what had happened, but I did not want to look at him.  I was afraid to look at him.  I didn’t care: I was afraid.  I was also a failed Boy Scout, so I asked some inane question to cover up my cowardice. 

            Isithishead?  Headinjury? 

            But my mother was talking into the phone.  I took a breath, stepped around her and looked into their bathroom.

            My father was in his bathrobe, sitting in the empty tub, his legs hooked over the edge of the tub, feet dangling.  (Later, it was surmised he had gone into the bathroom, thinking he would throw up; had sat on the edge of the tub; and had tumbled backwards  into the empty tub when the heart attack hit).  His eyes were shut, but he was making a chuck-chuck noise through his nose, a violent snuffling.  His right arm rose in the air, as though one of the little coal-demons were yanking it upwards with thread.

            Perhaps he was dying at the moment; perhaps it was a body in some sort of death throes.  (I do not know and never asked.  The doctors gave us the obligatory He-never-felt-a-thing, which I doubted even then).

            My mother had called the ambulance.  Perhaps she knew full well and did not want me to see.  She told me to go out the front door and look for the ambulance.  Which, to my relief and shame, I ran and did.

            Neighbors, food, flowers, funeral.  My parents had many friends, and the house was filled with flowers.  To this day, I cannot abide the smell of flowers.

            That was forty-one years ago.  What to make of it this Father’s Day, for your benefit or mine?

            Perhaps we only understand aspects of ourselves when we understand aspects of our fathers, and the latter understanding comes only with time.  My time was ambered – that backwards-telescope problem – but now, with my own children, I can see my face in theirs and, more than ever before, Daddy’s face in mine.  I appreciate, perhaps, what he might have been thinking about a job, a child, the future.

            And perhaps we only look into a father’s face when enough time has passed to get us to the same age as he, so to speak: the same age as when something happened to you as a child, something critical or weird or shameful.  I was afraid at his death, fearful watching it, impotent.  No Boy Scout, me.  Guilt at not doing something Boy Scout-like.  Mouth-to-mouth?  Some kind of pounding on his chest?  Getting in the tub and holding him until he died?

            Whatever it was I should have done, I failed to do it.

            I believe the Gospel, and so I believe that he and I will meet again.  Sometimes, over the years, I have been terrified that he will judge me for my failure, there in a dying man’s bathroom in 1973.  What a judgment upon me that would be, would it not?

            Yet now I am older than he was on that day, and the telescope seems to distort his memory less now than it did before.  Peculiar, isn’t it?  Now, when I fear his judgment, memory replays how my failure to close that window caused that Beetle to get stolen, and how he acted towards his child.

            True, someone got their dune buggy out of it.  All I got was love.

            Happy Father’s Day.

           


Public Corruption, Alabama, the Hurry-Up Offense and Lynyrd Skynyrd

Flying over corruption?

Flying over corruption?

According to the  FCPA Blog, Alabama is supposedly the 6th most-corrupt state in the Union.  Mississippi takes top honors.  Oregon claims to be the least corrupt.  (Perhaps the Ducks’ hurry-up offense leaves no time for kickbacks).  Here is the full study.

By “corruption,” the authors focus on public corruption as prosecuted by DOJ’s Public Integrity Section.

Gatekeepers.

Gatekeepers.

 

 

Public Integrity’s track record in Alabama has been mixed, though, most recently in the “bingo” acquittals. For some white-collar defendants, it may be Sweet Home, Alabama after all, but there can be immense pain, expense and destruction along the way.


The Agatha Christie School of Cooperating Witnesses

Tyrone Power, Jr. in Witness for The Prosecution (1957)

Tyrone Power, Jr. in Witness for The Prosecution (1957)

From Lawrence S. Goldman and our friends at White Collar Crime Prof blog, a summary of a Second Circuit decision  addressing (1) the extent to which prosecutors can “bolster” cooperating witnesses’ testimony by relying on their cooperation agreements and (2) whether or not the tardy production of Brady and Jencks material matters.   (Answer: it doesn’t).  In particular:

The opinion also excuses, but does not condone, the improper failure of the government to turn over handwritten notes by a testifying agent which were discovered in the later examination of another agent and belatedly revealed to the defense.  The notes should have been revealed earlier, says the Court, not only since they included evidence favorable to the defense, but also pursuant to Fed. R. Crim. Pro. 16(a)(1)(B)(ii), a discovery rule, and 18 U.S.C. 3500, the Jencks Act.  However, since the notes were, however belatedly, turned over and the defense had an opportunity to review them, examine the later-testifying agent about their content, and recall the earlier witness if it chose, and since their timely disclosure would not have changed the verdict, in any case there was no Brady violation.  The opinion thus demonstrates that late provision of Brady (or Rule 16 or Jencks) by the government during trial will virtually never be grounds for reversal, at least not in the Second Circuit.

The well-dressed Government witness.

The well-dressed Government witness.

We have written before about cooperation agreements before here and here, and Brady non-disclosure abuse here.  And here is the trailer for Billy Wilder’s 1957 film Witness For The Prosecution (starring Tyrone Power, Jr. and Charles Laughton).