LEGAL
One of the biggest attractions of in-house practice is the diversity of projects and issues that are likely to come your way, particularly if you are the only in-house counsel or working in a small legal department in which everyone is expected to “pitch in” and avoid excessive specialization. At the same time, however, this situation raises serious ethical issues for lawyers who are continuously being pushed outside their professional “comfort zone” since they are required to serve their clients, in this case the companies for which they work, with competence and diligence. Those requirements are fair and reasonable, and go to the heart of being a good counselor, but in order to meet those standards a lawyer must take a hard look in the mirror and ask whether or not he or she is really qualified to take on a project or give an informed answer to a non-lawyer colleague within the company who thinks that, because you are a lawyer, you must be able to answer any question that relates to the law.
Many in-house lawyers don’t realize that the concepts of “competence” and “diligence” are fleshed out in some detail in their state rules of professional conduct and that the rule can provide a basic framework to analyze whether or not the lawyer might be in danger of violating his or her professional duties to the client by venturing into practice areas that are unfamiliar to him or her. While state rules vary, they are generally modeled on the ABA Model Rules of Professional Conduct (“Model Rules”).
With respect to “competence,” Model Rule 1.1 mandates that “[a] lawyer shall provide competent representation to a client” and explains that “[c]ompetent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.” As for “diligence,” Model Rule 1.3 sets out the expectation that “[a] lawyer shall act with reasonable diligence and promptness in representing a client.” The Comments to Model Rules 1.1 and 1.3 provide helpful insights for in-house attorneys confronted with a legal issue or transaction that is relatively unfamiliar to them or in-house attorneys who are struggling with a heavy workload and/or outside events that may be undercutting the amount of time available to serve their clients.
Comment [1] to Model Rule 1.1 notes that “[i]n many instances, the required proficiency is that of a general practitioner”; however, the Comment also concedes that “[e]xpertise in a particular field of law may be required in some circumstances.” The initial assumption for all lawyers, regardless of their training or experience, is that they will be able to provide certain basic and important legal skills: the analysis of precedent, the evaluation of evidence, legal drafting, and the ability to determine what kind of legal problems a situation may involve. Beyond that, however, the lawyer needs to take a hard and candid look at the answers to the following questions before deciding that he or she is capable of providing the requisite knowledge and skill with respect to a particular matter:
When pondering these questions, the lawyer must take into account what is at stake for the client. As noted in Comment (5) to Model Rule 1.1: “The required attention and preparation are determined in part by what is at stake; major litigation and complex transactions ordinarily require more extensive treatment than matters of lesser complexity and consequence.”
The Model Rules refer to a “general practitioner,” and many in-house attorneys are hired based on the implicit understanding and expectation that they will be competent “generalists” able to handle a wide range of matters. The scope of these expectations is influenced by the size of the legal department and budget for outside law firms: Lawyers in smaller law departments are typically under extreme pressure to take on matters that fall outside their experience and competency. Things become even more difficult when the non-lawyers in the organization seek quick answers to questions without delay or equivocation. In spite of all of this, in-house lawyers must develop the discipline to push back against unreasonable demands from their internal clients, remembering to caution those clients that a hasty answer can be worse than no answer at all if it turns out to be incorrect or based on incomplete factual collection or analysis.
Before deciding that he or she has the requisite competence to take on a matter, the lawyer must be comfortable that he or she has kept abreast of changes in the applicable law and its practice, including the benefits and risks associated with relevant technology. Typically, this means engaging in continuing study and education and complying with all continuing legal education requirements to which the lawyer is subject. However, keeping up with CLE requirements can be difficult for in-house lawyers, since there never seems to be enough time and their clients are often reluctant to pay for the courses. In-house lawyers also lack “down the hall” access to colleagues who they can turn to for ideas about how to proceed on a particular matter.
In addition, the lawyer should not ignore his or her obligations with respect to “diligence.” Comment (2) to Model Rule 1.3 admonishes lawyers to control their workload so that each matter they take on can be handled competently. Once a matter has been taken on, the lawyer must be prepared to pursue it on behalf of a client despite opposition, obstruction, or personal inconvenience to the lawyer (emphasis added by author). The possibility of neglect or procrastination must be taken into account by the lawyer before he or she takes on a new matter, since he or she has a duty to act with reasonable promptness and any actual or apparent failure to be on top of the matter at all times will create anxiety with the client and undermine the client’s trust in the lawyer’s skills and judgment.
As with the expectations of the in-house client regarding the scope of competence of in-house lawyers, the client also tends to have little tolerance for in-house lawyers who worry about whether they will have the time to take on a new matter. In-house lawyers are consistently flooded with requests for assistance, and it does not take long for their plates to reach the overflow point. When this happens, it’s time for the in-house lawyer to proactively seek control of the situation, either by prioritizing existing work and rearranging deadlines or by convincing the appropriate decision makers inside the client that they need to bring on additional in-house legal personnel or turn over certain projects to outside lawyers who are better qualified and capable of providing an acceptable return on investment for the client.
If the lawyer determines that the best course of action is to retain or contract with other lawyers outside of the law department to provide or assist in the provision of the legal services required by the client, he or she should obtain informed consent from the client and must reasonably believe that the other lawyers’ services will contribute to the competent and ethical representation of the client. Before taking this step, the lawyer must conduct reasonable due diligence on the education, experience, and reputation of the outside lawyers; the nature of the services assigned to the outside lawyers; and the legal protections, professional conduct rules, and ethical environments of the jurisdictions in which the services will be performed, particularly relating to confidential information. The lawyer should expect that he or she will be obligated to comply with Model Rule 5.1, which imposes obligations on lawyers supervising other lawyers to make reasonable efforts to ensure that those being supervised conform to the Model Rules.
In some cases, the lawyer may outsource certain projects to non-lawyers, particularly when the lawyer doesn’t have the time and/or expertise to do them on their own. Examples include relying on outside providers for document review and management or legal research (when done by paralegals rather than lawyers). The Model Rules allow for this; however, Model Rule 5.3 obligates the lawyer to make reasonable efforts to ensure that outside providers conduct themselves in a manner that is compatible with the professional obligations of the lawyer. This means doing proper due diligence before engaging the provider; reviewing the security of the facilities where the provider will be carrying out the project, if not inside the client’s office; and review the education, experience, and qualifications of the specific persons involved in the project. The lawyer should be sure that his or her client is aware of the outsourcing and has given explicit consent, and the lawyer should maintain a record of the specific steps taken to oversee and supervise the activities of the provider.
Every lawyer has a different comfort zone and tolerance for uncertainty, and these factors play an important role in how a particular lawyer assesses whether or not he or she is comfortable taking on a new project or issue. The Model Rules provide guidelines that lawyers can follow to achieve the requisite comfort level; however, they often call for lawyers to invest time and effort in gaining additional knowledge, a luxury that may not be available in a bustling in-house practice. In addition, at some point in their career, a lawyer will realize that it is simply impractical to assume that he or she can properly represent his or her client. For example, while laypeople often assume that a lawyer has been down at the courthouse every morning, the reality is that not every lawyer knows how to properly and effectively handle a litigation matter. Similarly, complex issues surrounding ownership and use of technology and data are best left to experts given the “bet the company” importance of managing those assets.
As an in-house lawyer, you will need to know your limits and be prepared to explain them clearly to your supervisors in both the law department and elsewhere in the company. This is not the easiest thing to have to do; however, biting off more than you can chew will ultimately lead to trouble for both you and your company. While it does appear that “organizational clients,” such as your in-house employer, are less inclined to petition the bar for disciplinary actions against their in-house attorneys, the possibility cannot be ruled out. Even if that does not happen, you will likely find yourself without a job, even though you had the best intentions with respect to helping your client.
Unfortunately, you may also find that even when you properly and prudently limit the scope of the work you take on for your in-house client, you will harm your relationship with your employer. For example, the best course of action for a particular problem may be to engage outside counsel with expertise in a particular area. This is all well and good; however, when the bills for those services start coming in, your supervisors may not be pleased since the hourly rates typically exceed the salaries being paid to you and other in-house lawyers. In that situation, you will need to be prepared to explain the costs to your supervisor and proactively supervise the work of the outside law firm. In addition, your duties with respect to supervision include educating yourself at a basic level about the issues and processes involved in the particular matter so that you can be an informed consumer of the outside legal services. For further information on the issues discussed above, see Chapter 2 (“Establishing Attorney-Client Relationships”) in Business Transactions Solution on Westlaw.
Alan S. Gutterman is a regular contributor to Corporate Counsel Connect and is the Executive Director and Founder of the Business Counselor Institute and the International Center for Growth-Oriented Entrepreneurship. Mr. Gutterman has served as the general counsel for several companies during his career, including a large distributor of consumer electronics with operations in several foreign countries. Additional commentary and practice tools that a general counsel can use in guiding his or her company down the road of “going global” can be found in Mr. Gutterman’s Westlaw database, Business Transactions Solution.
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