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As the legal eyes and ears of a company, general counsel takes a front row seat in handling lawsuits and corporate legal matters. And while that role can make for high-profile recognition, it can also subject in-house attorneys to increased liability. Attorneys from Schiff Hardin released a white paper outlining strategies for general counsel to avoid personal liability. Below are salient take-aways from the publication.
In-house counsel, how can you avoid personal liability?
1. Request to be included in the company's directors and officers liability insurance. Corporate executives, making major decisions on strategic development of the company, receive protection for professional decisions under corporate indemnification policies. And in-house attorneys should pursue the same. Being included in such policies not only provides peace of mind to the corporate legal team, but can also benefit the company in by providing added incentives in recruiting high-quality general counsel candidates, creating a "safety net" to guard against overly-cautious in-house legal advice, and will promote general compliance for in-house counsel conduct.
2. Develop a company culture of seeking a "second-opinion" for issue-reporting escalation. Rather than reserving corporate counsel opinion for matters that have already escalated to orange-level status, in-house attorneys should encourage company officers and executives to dialogue about questions on topics such as employment, discrimination, and Sarbanes-Oxley matters...as they arise.
3. Object, when called called for. In the excitement of a new corporate direction or strategic risk being pursued by the company, a veto by in-house counsel may be an unpopular sentiment. However, if the suggested corporate policy or deal will subject the company and its officers to heightened liability, general counsel should not hesitate in airing reservations about the plan, and even refusing to sign off on it. Preventative steps taken early may minimize any complex and costly defense maneuvers the company will have to make later.
4. Don't forget: the company is the client. Collaboration between in-house legal departments and the company's HR and IT groups can lead to effective communication regarding policy and compliance; however, in exercising cross-functionality, general counsel should not forget that it is ultimately the company, rather than any individual or individual department, that is the client. Counseling an officer or team should not come in the way of acting in the best interest of the company. If it does, then those matters should be passed on to outside counsel.
The many roles assumed by corporate legal departments can lead to increased risk of personal liability. However, by taking steps to preemptively reduce risk, general counsel can be more effective in ensuring corporate compliance and protecting its primary client, the company.
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.
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