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Common ethical issues for in-house counsel

By Sterling Miller

If you read through the ABA Model Rules of Professional Conduct or your applicable state rules (and you should), you will see that most of the rules written are for lawyers in private practice. Rules specifically addressing in-house counsel are few (but in-house counsel must comply with all of them nonetheless). There are several reasons for this disparity – there are no fee disputes for in-house lawyers, no client trust-account issues, no advertising issues, and in-house lawyers are employees of the client.

But in-house lawyers are now frequently in the cross-hairs of regulators and are expected to be “gatekeepers” whose job is, in part, to keep the company honest in ways that do not always fall clearly within the rules of professional responsibility. 

All this requires a delicate balancing act. Understanding that things “are different” in-house gives you a lens to consider the different ethical issues that pass your way.

Five ethical questions for in-house counsel

1.       Who is the client? Though you interact daily with senior management and others, an in-house lawyer’s client is the company and not any one individual. This can lead to some awkward moments, especially during internal investigations where you must make it clear to the individual that you represent the company not them, usually through an “Upjohn” warning. It’s also easier to mix business and legal advice, jeopardizing the attorney-client privilege.

2.       Unauthorized practice of law. Working in-house means it’s sometimes easier to forget to renew your law license, take required continuing legal education courses, or ensure that you have complied with the state licensing requirements (i.e., some just require a valid license from any state, others require some type of license from that state).

3.       Outsourcing legal work. Legal departments often hire non-law firms to provide services like document or due diligence review, contract preparation, and legal research. Under §§5.1 and 5.3, you are responsible for their work product and for ensuring they comply with the ethical rules.

4.       Duty of competence. In-house lawyers have a duty of competence under §1.1. For example, you must be technologically savvy, e.g., e-discovery or cyber-security and know when you must go to outside counsel to deal with a legal question. Further, malpractice claims against in-house lawyers are on the rise.

5.       Reporting misconduct. Rule 1.13(b) also causes tension as. In, under the right circumstances, you must report to a higher authority when the actions of officers or employees violate a legal obligation to the company, render the company responsible for violating a law, or are likely to result in substantial injury to the company. 

Navigate ethical issues

Read the Practice Note, “Ethical issues for in-house counsel,” available with a free trial of Practical Law Connect.