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In-House Attorneys Feel Targeted by Hyper Regulation

The Daily Business Report has an excellent article, wherein they report that key players, including corporate counsel, are increasingly finding themselves under intense regulatory scrutiny. As a result, in-house lawyer liability for corporate misconduct is edging up.

It is reported that between six and nine criminal or civil and administrative cases are brought against  companies' top attorney every year. However panelists at the Association of Corporate Counsel annual meeting in Denver were unable to agree on the severity of the problem. Some have suggested that the job of general counsel is not safe. Others counter than the SEC is not on a witch-hunt for inside lawyers. Nevertheless, regulatory and economic pressures on in-house lawyers are underlying themes across many of the annual meeting's 80-plus panels and other events.

Corporate counsel were generally considered exempt from scrutiny, as they were considered a corporation's legal advisers. However, corporate counsel are now considered key players and therefore prime targets for government investigations. Some speculate that when the top lawyer gets in trouble, it is because that individual was wearing "two hats" by doubling in another senior management level position, such as chief financial officer. However where the top lawyer relied on the advice of outside counsel for similar matters, they have almost never been targeted.

This advice that should be taken away from this article is that the general counsel of a company has the broadest responsibility for the well-being of a company. As a result, the general counsel should not allow their advocacy skills to overwhelm their role as counselor and should rely more on the advice of outside counsel when faced with a corporate dilemma.

If you are interested in receiving a complete copy of the DBR article or wish to contact me, you may do so at miamipandi@comcast.net or motero@houckanderson.com.

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