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Counseling the Counselors
In the wake of recent product liability firestorms, there has been a heightened emphasis on corporate accountability. The actions of officers, directors and even corporate professionals are being more closely scrutinized than ever before, and in this climate, the personal liability risk of in-house counsel has increased exponentially. Because in-house attorneys must necessarily hover between multiple roles on a daily basis, including attorney, businessperson, investigator, and compliance officer (to name a few), these individuals are especially susceptible to heightened liability exposure. A variety of potential liability theories ' such as professional malpractice and breach of fiduciary duty claims ' may be pursued against in-house counsel by the corporation, its shareholders, and members of the public, as well as by governmental authorities.
Further complicating matters is the Responsible Corporate Officer (RCO) doctrine, which has gained serious traction in recent years. This doctrine allows civil and criminal liability to be strictly imposed on corporate employees for violations of law that occurred during their tenure if they had the power, by virtue of their position, to prevent or correct violations of law but failed to do so ' regardless of whether such employees had individual intent, awareness of the wrongdoing, or direct involvement in the misconduct. Often described as “the crime of doing nothing,” the RCO doctrine raises the possibility that personal liability for a corporation's misdeeds may be imposed on an in-house attorney based on nothing more than the attorney's position at the corporation.
The government's increased efforts to hold corporate employees personally responsible for corporate misconduct is illuminated by the widely publicized six-count indictment brought against a former in-house counsel of a pharmaceutical company alleging that the attorney obstructed an official proceeding, falsified and concealed documents, and made false statements during a Food and Drug Administration (FDA) investigation into whether the company had improperly introduced a misbranded drug into interstate commerce. The charges subjected the attorney to a maximum of 60 years in federal prison. The indictment was dismissed due to erroneous and prejudicial advice given to the grand jury; yet one month later, the government re-indicted the attorney on the same charges. After the prosecution had presented its case-in-chief, the judge ' in an unusual move ' granted the attorney's motion for a judgment of acquittal before the defense had even presented its case and admonished the Department of Justice (DOJ), stating that the case should never have been prosecuted. Although an acquittal was ultimately obtained, the attorney was still forced to endure two indictments, a trial, and extensive press coverage ' a series of events that sent a collective chill down in-house attorneys' spines.
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