Ethics in Employment Matters What are In-House Counsel s Ethical Obligations When Dealing With Employment Matters

Transcription

1 Ethics in Employment Matters What are In-House Counsel s Ethical Obligations When Dealing With Employment Matters October 11, 2017 Moderator - James Villa, Senior Vice President, General Counsel, Corporate Secretary and Chief Compliance Officer, Versar Panelists - Christine B. Lucy, Associate General Counsel, Booz Allen Hamilton Heidi L. Steiber, Associate General Counsel, PCAOB Deborah Kelly, Partner, Manatt, Phelps & Phillips, LLP (dkelly@manatt.com) Nigel Wilkinson, Partner, Manatt, Phelps & Phillips, LLP (nwilkinson@manatt.com) Rory Adams, Associate, Manatt, Phelps & Phillips, LLP (radams@manatt.com) 1

2 TABLE OF CONTENTS I. INTERNAL INVESTIGATIONS STEMMING FROM EMPLOYEE COMPLAINT OF POTENTIALLY WRONGFUL CONDUCT: WHO IS THE CLIENT AND ARE SUCH INVESTIGATIONS PRIVILEGED?... 1 II. III. IV. A. Who is the Client?... 1 B. Upjohn WARNING... 2 C. Is the Investigation Privileged?... 4 D. Who Should Conduct the Investigation? Internal or Third-party Investigator?... 6 E. Presentation of findings... 9 UNAUTHORIZED PRACTICE OF LAW CONCERNS: CAN YOU HANDLE A MATTER THAT ARISES AT A COMPANY FACILITY IN A STATE IN WHICH YOU ARE NOT LICENSED... 9 A. So What is the Practice of Law? B. To What Extent is the Practice of Law Permitted Without Local Bar Admission? JOINT REPRESENTATIONS ISSUES WHAT HAPPENS WHEN THE EMPLOYEE SUES BOTH THE COMPANY AND THE BOSS PERSONALLY ETHICS IN MEDIATION AND OTHER CONCILIATORY EFFORTS DESIGNED TO RESOLVE EMPLOYEE DISPUTES A. Bluffing or puffing about the value of the case B. Misrepresentations and Omissions C. Disclosure of Confidential Information Obtained in Mediation D. Misuse of the Mediation Process E. Lawyer s Obligation to Consult with the Client in Mediation V. WHAT CAN YOU DO WHEN AN EMPLOYEE TAKES WORK-RELATED DOCUMENTS TO SUPPORT HIS CASE A. Virginia Legal Ethics Opinion 1786 (dated Dec. 10, 2004) B. Measures an employer can take to protect its confidential and proprietary information C. Real Life Example 1: Brainware, Inc. v. Mahan D. Real Life Example 2: Audio-Video Group, LLC v. Green i-

3 TABLE OF CONTENTS (continued) Page VI. USING SOCIAL MEDIA IN THE WORKPLACE A. Statutory Protections Regarding Social Media B. Social Media Use in Background Checks C. Best Practices for Using Social Media in the Hiring Process D. Social Media Policies in the Workplace E. Sample Social Media Policy ii-

4 Over the past few years, many in-house legal departments have assumed responsibility for handling most, if not all, employment-related matters. This includes receiving and investigating employee complaints, representing the company before the EEOC or comparable state agency, and even representing the company in litigation or arbitration. Below, we explore some of the possible ethical issues that can arise when dealing with a various employment legal matters that can arise in the workplace. I. INTERNAL INVESTIGATIONS STEMMING FROM EMPLOYEE COMPLAINT OF POTENTIALLY WRONGFUL CONDUCT: WHO IS THE CLIENT AND ARE SUCH INVESTIGATIONS PRIVILEGED? Internal investigations are an important tool for responding to complaints or incidents of suspected workplace misconduct, and an essential step to enhance the likelihood of successfully defending against an employment-related claim. They help the employer determine whether allegations of misconduct have any merit, who was involved in the misconduct, disciplinary or other measures that should be taken against the alleged perpetrator to prevent recurrence and limit employer liability, and preventative steps to avoid future similar incidents. Effectively conducting internal investigations of employee allegations is certainly one step in the process. But also important is recognizing the significant ethical issues that can arise for the attorneys participating in those investigations. Companies often ask both in-house and outside counsel to oversee, respond, or conduct internal investigations of alleged misconduct that may pose a civil or criminal threat to the organization, its manager, and employees. Counsel may be retained to represent individuals who are the subject of the investigation, who may have key documents and information, or who may have witnessed the alleged misconduct. Regardless of the role assumed by counsel, we discuss below some of the common ethical dilemmas that may arise during the course of an investigation. A. Who is the Client? If you work for or are retained by the company as in-house or outside counsel, then the organization, not its individual employees or officers, is the client. Virginia Rule of Professional Conduct 1.13(a) states: A lawyer employed or retained by an organization represents the organization acting through its duly authorized constituents. Rule 1.13(b) directs a lawyer representing an organization to proceed in the best interests of the organization if the lawyer knows that an officer, employee, or other person associated with the organization is or is about to engage in an act (or refuses to act) in a matter related to the representation that is a violation of a legal obligation to the organization, or a violation of law which reasonably might be imputed to the organization, and is likely to result in substantial injury to the organization. 1

5 In such a situation, Va. Rule 1.13(d) makes it clear that a lawyer is obligated to identify who his or her client actually is: In dealing with an organization's directors, officers, employees, members, shareholders or other constituents, a lawyer shall explain the identity of the client when it is apparent that the organization's interests are adverse to those of the constituents with whom the lawyer is dealing. 1 B. Upjohn WARNING When conducting an internal investigation, whether or not you, as the lawyer, believe that a company s officer s or employee s interests are or may become adverse to those of the company, it is a better practice to provide and document an Upjohn warning at the outset of the investigation. 2 The purpose of such a warning is to ensure that communications between the lawyer and a lower-level employee are protected by privilege, and requires that the lawyer inform the employee that the lawyer represents the company, and not the employee individually. The key elements of such a warning are: Counsel represents the company and not the employee. The purpose of the interview is to learn facts in order to provide legal advice to the company. The interview is confidential and protected by the attorney-client privilege. The company is the holder of the privilege, not the employee. The company may decide to disclose the information obtained during the interview to third parties. A sample script of such a warning from an outside law firm (which could be tailored to work for an in-house counsel s office) might look something like this: I am a lawyer from [name of law firm] and I represent the Company. My only client here today is the Company. I want to be clear that neither my firm nor I represent you personally. 1 The corresponding rules in both the District of Columbia and Maryland are essentially the same. D.C. R. Prof. Conduct 1.13; Md. R. Prof. Conduct The so-called Upjohn warning stems from the U.S. Supreme Court s 1981 decision in Upjohn Co. v. United States, 449 U.S. 383 (1981) in which the court held that the attorney-client privilege is preserved between the company and its attorney when its attorney communicates with the company s employees, despite the rule that communications with third parties constitute a waiver of the attorney-client privilege. 2

6 [Law firm] has been retained by the Company to conduct a confidential investigation into certain issues relating to [the subject of the investigation]. I am conducting this interview to determine the facts and circumstances of [the subject of the investigation] so I can provide legal advice to the Company and help to advise the Company how best to proceed. Because you are an employee of the Company and I am interviewing you in that capacity, this interview is protected by the Company s attorney-client privilege. The Company s privilege requires that you keep the discussions we have during this interview completely confidential. In other words, with the exception of your own attorney, you must not disclose the substance of this interview to anyone, including other Company employees, officers, or directors, or to anyone outside of the Company, including your family. The attorney-client privilege that protects this interview belongs solely to the Company, and not to you. Since the attorney-client privilege belongs to the Company, the Company reserves the right to waive its privilege and to provide the contents of our interview to third parties outside of the Company, including state or federal government agencies and law enforcement authorities. Whether the Company waives the privilege is the Company s decision alone. The Company is not required to consult with you or to notify you before doing so. Is there anything I have said that you do not understand? Do you have any questions? Are you willing to proceed? It is important to document the fact that the Upjohn warning was given, preferably in a post-interview memorandum or reflected in the notes of the interview. It is also possible to give the employee a copy of the script and ask them to sign it. If such warnings are not properly given, or not given at all, counsel could be deemed to also represent the employee, which raises a litany of conflict of interest issues and could affect privilege. For example, in In re Grand Jury Subpoena, 415 F.3d 333 (4th Cir. 2005), the court ultimately found that company lawyers had provided just enough information to thwart individual employees claims that the lawyers represented them on an individual basis, and thus they (the individual employees) could not assert the attorney-client privilege against grand jury subpoenas seeking documents related to an internal investigation. Attorneys who conducted internal investigation informed interviewees at the outset: We represent the company. These conversations are privileged, but the privilege belongs to the company and the company decides whether to waive it. If there is a conflict, the attorney-client privilege belongs to the company. But the attorneys also told the interviewees that they could represent the witness too, as long as there was no conflict. 3

7 The company wanted to waive privilege over the investigation; the employeeinterviewees tried to prevent waiver on the ground that they were the client and the holder of the privilege. The court rejected this claim and found that the warnings were sufficient to render the company the sole client, but criticized the watered-down Upjohn warnings that were provided. The court noted that the warnings given presented a potential legal and ethical mine field. Had the investigating attorneys, in fact, entered into an attorney-client relationship with appellants, as their statements to the appellants professed they could, they would not have been free to waive the appellants' privilege when a conflict arose. It should have seemed obvious that they could not have jettisoned one client in favor of another. Rather, they would have had to withdraw from all representation and to maintain all confidences. Indeed, the court would be hard pressed to identify how investigating counsel could robustly investigate and report to management or the board of directors of a publicly-traded corporation with the necessary candor if counsel were constrained by ethical obligations to individual employees. Id. at 340. C. Is the Investigation Privileged? Certainly, one of the reasons an attorney will give an Upjohn warning at the outset of an internal investigation is to allow the lawyers to obtain facts in order to provide legal advice, and preserve privilege while doing so. Two of the more significant recent decisions in dealing with the privileged nature of internal investigations have come out of the D.C. Circuit. 1. The Investigation is privileged, KBR part 1 In In re Kellogg Brown & Root, Inc., 756 F.3d 754 (D.C. Cir. 2014) the appeals court reversed the district court's holding that the attorney-client privilege did not apply to documents created by a DOD contractor s compliance team during an internal corporate investigation undertaken to comply with DOD regulatory requirements and corporate policy. The district court ruled that the attorney-client privilege did not apply to these documents because obtaining or providing legal advice was not the sole purpose of the communication. But the appeals court rejected this but-for standard, and held that the privilege could protect a company's investigation if its need for legal advice was one of the "primary" or "significant" motivating purposes, even if not the only purpose: In the context of an organization's internal investigation, if one of the significant purposes of the internal investigation was to obtain or provide legal advice, the privilege will apply. That is true regardless of whether an internal investigation was conducted pursuant to a company compliance program required by statute or regulation, or was otherwise conducted pursuant to company policy. In re Kellogg Brown & Root, Inc., 756 F.3d 754, 760 (D.C. Cir. 2014). 4

8 The appeals court found that the district court erred in rejecting privilege on other grounds as well. Specifically, it held: The requirement under government regulations to investigate alleged fraud did not preclude the appellant's argument that a significant purpose of the investigation was to seek legal advice; Fact that the interviews were conducted by non-attorneys was not dispositive ( communications made by and to non-attorneys serving as agents of attorneys in internal investigations are routinely protected ); The absence of explicit Upjohn warnings did not prevent privilege protection because "nothing in Upjohn requires a company to use magic words." Although the employees' confidentiality agreements did not expressly mention the company's need for legal advice, employees knew the law department was conducting a sensitive investigation and were warned not to discuss their interviews without the authorization of the appellant's general counsel. In re Kellogg, 756 F.3d at No Waiver, KBR part 2 A little more than a year after the 2014 KBR decision issued, the case was back before the D.C. Circuit Court of Appeals in In re Kellogg Brown & Root, 96 F.3d 137 (D.C. Cir. 2015). While the 2014 decision broadly addressed the scope of attorney-client privilege in internal investigations, the 2015 decision reduced the potential for opposing parties to argue that any mention of an internal investigation in litigation will result in waiver. At issue in this case, was the at issue waiver, which finds waiver of privilege if the party relies on a privileged communication to support a claim or defense. In this subsequent case, the appeals court rejected the district court s holding that the company waived privilege by putting its internal investigation at issue the litigation. The Court of Appeals found no at issue waiver because the company did not base a claim or defense upon the attorney s advice or disclose the findings of the investigation. While the company implied that the investigation found no wrongdoing because it stated that findings of misconduct must be reported to the DOJ and no report was made in the case, this statement was made in a footnote in the facts section of its summary judgment brief and not in the argument section. Id. at

9 3. But Waivers can and do occur As noted above, the 2015 KBR decision decided that no waiver occurred because KBR did not put the privileged communication at issue in the case. But if a privileged communication is put at issue, then waiver can and will occur. In the employment context, an employer may choose to rely on the adequacy of its internal investigation as an affirmative defense to a harassment claim. In the circumstance, the employer waives the privilege over the investigation by putting its findings at issue in the case. Courts routinely hold that the privilege may not be used as both a sword and a shield. See, e.g., Walton v. Mid-Atlantic Spine Specialists, P.C., 280 Va. 113 (2010); Courtade v. United States, 243 F.Supp.2d 699, 702 (E.D. Va. 2017) (noting that the sword and shield rule is rooted in fairness. In practical terms, it means that parties in litigation may not abuse the privilege by asserting claims the opposing party cannot adequately dispute unless it has access to the privileged materials. In such cases, the party asserting the claim is said to have implicitly waived the privilege. ) Waiver in an EEOC position statement? This may also occur under relatively new EEOC practices. In 2016, as part of its efforts to create a consistent approach to be followed in all of EEOC s offices, the EEOC implemented nationwide procedures that provide for the release of Respondent position statements and non-confidential attachments to a Charging party or her representative upon request - while the charge is pending (previously these would be available only after a lawsuit was filed). Courts have found reference to the substance of otherwise privileged communications in a position statement to be a waiver of privilege in a subsequent litigation. See, e.g., Leftwich v. City of Pittsburg, Kansas, 2017 WL , at *2 (D. Kan. June 27, 2017) ( defendants waived the privilege by intentionally injecting into the case, through their position statement to the EEOC... the city attorney's participation in the termination decision ); cf. Robinson v. Vineyard Vines, LLC, 2016 WL , at *5 n.8 (S.D.N.Y. Mar. 4, 2016)(rejecting claim that reference to internal investigation of harassment claim in EEOC position statement waived privilege because there was no evidence that Defendants have made any unfair selective or misleading presentation of evidence in this litigation ). D. Who Should Conduct the Investigation? Internal or Third-party Investigator? With all of these privilege issues at stake, and concerns over conflicts of interest, the question often arises as to who should conduct the investigation? Should it be HR? Should it be the in-house lawyer? Should it be the in-house lawyer and HR? Or should it be an outside consultant, investigator, or outside counsel? Obviously, who conducts the investigation will affect whether the investigation is privileged, at least at the outset. But a good rule of thumb is to reasonably segregate the attorney s advice and other privileged communications. This places the company in a better position to avoid waiver, irrespective of who the company chooses to conduct the investigation. 6

10 1. Do you choose an internal or third party investigator? There are certain advantages to using an internal investigator. These include: Familiarity with corporate culture and the personalities involved, as well as with employer rules and regulations and how they are enforced, enabling the investigator to get started more quickly. Uniformity in the investigative process, reducing the risk of discrimination allegations. Credibility with employees, if the chosen investigator has developed a reputation for fairness. Not having to comply with the Fair Credit Reporting Act (FCRA). Cost effectiveness. There are also a number of advantages in using an external investigator, which include: Increased objectivity due to lower likelihood of familiarity with any of the individuals involved. Perception by complaining individuals that investigation is fair and independent. Expertise and experience of professional investigator. If using an attorney, a stronger presumption of privileged communications than with internal attorneys, who often provide business advice in addition to legal advice. The main disadvantage of using an external investigator is that their report may be covered by the FCRA, prompting disclosure and permission requirements relative to the individuals being investigated. The FCRA is a federal law regulating the use of third party service providers to obtain background information on applicants and existing employees. If an external investigator is considered a consumer reporting agency and the resulting report is considered a consumer report under the FCRA, certain disclosures to and permissions from employees being investigated are required. Other disadvantages of using an external investigator include greater initial investment time and startup cost. 7

11 2. Do you choose an attorney or non-attorney investigator? Another important factor in choosing an investigator is whether the employer should use an attorney (whether an attorney from the employer s legal department or from an external law firm). An attorney investigator allows the employer to apply the attorney-client privilege to the investigation in many situations. But, of course, the attorney-client privilege is not absolute. Where an in-house attorney plays a business and a legal role, the privilege may not apply if a court deems the attorney to have been conducting the investigation primarily for a business purpose, rather than in the attorney s legal role. However, the privilege generally applies if providing or seeking legal advice is one of the significant purposes of the investigation, even if there is also a business purpose See the reference to In re Kellogg Brown & Root, Inc., 756 F.3d 754 (D.C. Cir. 2014) (KBR, part 1), above. Using a particular attorney or law firm to conduct the investigation may preclude using that same attorney/firm from representing the company in a subsequent litigation. Va. Rule 3.7(a) sets this out: A lawyer shall not act as an advocate in an adversarial proceeding in which the lawyer is likely to be a necessary witness except where: (1) the testimony relates to an uncontested issue; (2) the testimony relates to the nature and value of legal services rendered in the case; or (3) disqualification of the lawyer would work substantial hardship on the client. 3 Under this witness-advocate rule, courts have disqualified attorneys as trial counsel when they conducted the internal investigation at issue in the litigation. E.E.O.C. v. Bardon, Inc., 2010 WL , at *1 (D. Md. Jan. 19, 2010) (disqualifying counsel who had been involved in the company's internal investigation into [plaintiff s] complaint of sexual harassment and in her termination from the company ); compare Goodwine v. City of New York, 2016 WL , at *4 (S.D.N.Y. Jan. 29, 2016) (refusing to disqualify counsel who had attended a single meeting with plaintiff and others regarding plaintiff s workplace complaint but was not otherwise involved in the investigation of the complaint). Of course, if an attorney is involved in the investigation, either directly or indirectly, the interviewees should receive the Upjohn warning discussed above. In most situations, the HR department should be involved in the planning and execution of the investigation. In an effort to preserve privilege when HR conducts the interviews without counsel being present, HR should indicate on all interview notes and other documents that a significant purpose of the investigation is to seek legal advice or that the interview is being conducted at the direction of counsel for the purpose of seeking or providing legal advice (remember KBR, part 1 above?). Additionally, all witnesses and participants in the investigation 3 See also D.C. Rule Prof. Conduct 3.7(a) (same); Md. Rule Prof. Conduct 3.7(a)(same) 8

12 should be informed of the investigation s purpose. If one of the members of the HR department is accused of wrongful conduct, then the HR department should not be involved. E. Presentation of findings Once the investigation is concluded and certain findings have been made, you should decide whether to report those findings in writing, or orally to the CEO, Board, or some other person or body. There are various factors to consider when making such a decision. The advantages of providing a written report include: it is easy to understand; it will contain carefully crafted themes; it will convey the results of the investigation consistently; it will reduce the likelihood that the recipient will misstate, misconstrue, or misremember the investigation s findings; and can show, where the investigation uncovered wrongdoing, that the company undertook and investigation and has begun to implement remedial measures. On the other hand, it increases the likelihood that, if litigation ensues, the plaintiff will obtain it in discovery, which depending on the findings, may help his or her case and obtain a blueprint of potential misconduct. It also more difficult to keep confidential, could jeopardize the attorney-client privilege or work-product protection, and could be construed as an admission under the applicable evidentiary rules. An oral report is less likely to be discoverable, minimizes some risks of investigating, more likely to remain confidential, and provides some flexibility to counsel if compelled to testify about the investigation or its findings. On the other hand, an oral presentation can be later affected by lack of memory or recall, which may create data integrity issues; and courts have found a lack of a written report to be problematic in some circumstances, such as when a factfinder is unable to scrutinize whether there was a thorough investigation and/or whether the employer came to a sound, supported conclusion. II. UNAUTHORIZED PRACTICE OF LAW CONCERNS: CAN YOU HANDLE A MATTER THAT ARISES AT A COMPANY FACILITY IN A STATE IN WHICH YOU ARE NOT LICENSED It should go without saying that it is quite important to avoid the unauthorized practice of law. Depending on the jurisdiction, engaging in the unauthorized practice of law can even result in criminal penalties. For example, in Virginia, a person who practice law without being authorized or licensed is guilty of a Class 1 misdemeanor. Va. Code That being said, many in-house counsel assume roles and responsibilities that do not constitute the practice of law. Handling matters arising at company facilities in states in which you are not licensed might not require further analysis than determining that your activities are not the practice of law. 9

13 A. So What is the Practice of Law? What constitutes the practice of law varies from jurisdiction to jurisdiction and is defined in statutes, rules, and case law. The practice of law in Virginia, Maryland, and the District of Columbia is defined as follows: 1. Virginia: The practice of law means (i) private practice as a sole practitioner or for a law firm, legal services office, legal clinic, or similar entity; (ii) practice as an attorney for a corporation, limited liability company, partnership, trust, individual or other entity, provided such practice involved the primary duties of furnishing legal counsel, drafting legal documents and pleadings, interpreting and giving advice regarding the law, and preparing, trying or presenting cases before courts or administrative agencies; (iii) practice as an attorney for the federal or a state or local government with the same primary duties as described above regarding attorneys for a corporation; (iv) employment as a judge for the federal or a state government; (v) service as a judicial law clerk for a state or federal court; or (vi) service on active duty in a branch of the armed forces of the United States as a judge advocate or law specialist, as those terms are defined in the Uniform Code of Military Justice, 10 U.S.C. 801, as amended, provided that such position requires a valid license to practice law and involves the same primary duties as described above regarding attorneys for a corporation. Virginia Supreme Court Rule 1A:1. [T]he relation of attorney and client exists, and one is deemed to be practicing law whenever (1) One undertakes for compensation, direct or indirect, to advise another, not his regular employer, in any matter involving the application of legal principles to facts or purposes or desires. (2) One, other than as a regular employee acting for his employer, undertakes, with or without compensation, to prepare for another legal instruments of any character, other than notices or contracts incident to the regular course of conducting a licensed business. (3) One undertakes, with or without compensation, to represent the interest of another before any tribunal--judicial, administrative, or executive--otherwise than in the presentation 10

14 of facts, figures, or factual conclusions, as distinguished from legal conclusions, by an employee regularly and bona fide employed on a salary basis, or by one specially employed as an expert in respect to such facts and figures when such representation by such employee or expert does not involve the examination of witnesses or preparation of pleadings. (4) One holds himself or herself out to another as qualified or authorized to practice law in the Commonwealth of Virginia. Virginia Rule of Supreme Court Part 6 1(B)(1) (emphasis added). 2. Maryland: The definition of the practice of law is established by law and varies from one jurisdiction to another. Whatever the definition, limiting the practice of law to members of the bar protects the public against rendition of legal services by unqualified persons. Md. Rule Comment 2. With respect to [Rule (a)], to determine the unauthorized practice of law, the focus of the inquiry should be on whether the activity in question required legal knowledge and skill in order to apply legal principles and precedent. Attorney Grievance Comm n of Md. v. Maignan, 4322 Md. 191, 203 (2011) (quoting Attorney Grievance Comm n v. Fallin, 371 Md. 237, (2002)). Practice law means to engage in any of the following activities: (i) giving legal advice; (ii) representing another person before a unit of the State government or of a political subdivision; or (iii) performing any other service that the Court of Appeals defines as practicing law.... [and] includes: (i) advising in the administration of probate of estate of decedents in an orphans court of the state, (ii) preparing an instrument that affects title to real estate, (iii) preparing or helping in the preparation of any form or document that is filed in a court or affects a case that is or may be filed in a court, or (iv) giving advice about a case that is or may be filed in court. Md. Bus., Occupations & Professions Code (h)(1)-(2). 3. District of Columbia: Practice of Law means the provision of professional legal advice or services where there is a client relationship of trust or reliance. One is presumed to be practicing law when engaging in any of the following conduct on behalf of another: 11

15 (A) Preparing any legal document, including any deeds, mortgages, assignments, discharges, leases, trust instruments or any other instruments intended to affect interests in real or personal property, will, codicils, instruments intended to affect the disposition of property of decedents' estates, other instruments intended to affect or secure legal rights, and contracts except routine agreements incidental to a regular course of business; (B) Preparing or expressing legal opinions; (C) Appearing or acting as an attorney in any tribunal; (D) Preparing any claims, demands or pleadings of any kind, or any written documents containing legal argument or interpretation of law, for filing in any court, administrative agency or other tribunal; (E) Providing advice or counsel as to how any of the activities described in subparagraph (A) through (D) might be done, or whether they were done, in accordance with applicable law; (F) Furnishing an attorney or attorneys, or other persons, to render the services described in subparagraphs (a) through (e) above. D.C. Ct. App. Rule 49(b)(2). Scenario: Robert, barred in Maryland, is General Counsel at Acme, Inc. Acme s headquarters is in Bethesda, where Robert works, but it has a branch office in Reston. Robert asks Samantha, a financial analyst working in the Reston office, to review a letter of intent and to draft a contract that complies with certain applicable federal regulations. Will Samantha be engaged in the unauthorized practice of law in Virginia? Answer: No. [I]t does not constitute the unauthorized practice of law for a non-lawyer to provide legal advice to or prepare legal instruments for his regular corporate employer since the definition of the practice of law does not encompass one who undertakes to provide such services to a regular employer. Va. UPL Opinion 178. Scenario: Christine is Acme s CFO. Over Robert s objection, she travels to Virginia Beach and successfully represents Acme in a AAA arbitration before a panel of arbitrators. After the arbitrators issue their ruling, the parties quickly reach a settlement agreement. Acme does not seek to have its arbitration award confirmed in court. Has Christine engaged in the unauthorized practice of law? 12

16 Answer: No. The practice of law in Virginia does not include advising or preparing legal instruments for one s regular employer. While it does include representing the interests of another before any tribunal, a tribunal does not include an arbitration proceeding. Va. UPL Opinion 203. It follows, therefore, that a non-attorney officer of a corporation can represent that corporation and provide legal advice to the corporation/employer within the context of an arbitration proceeding. Id. B. To What Extent is the Practice of Law Permitted Without Local Bar Admission? 1. Virginia Kurt is a member in good standing of the Swiss bar. Maria is a member in good standing of the bar of Puerto Rico. Acme has hired both Kurt and Maria as deputy general counsels based in the Reston office. Do they require Virginia licenses or registrations to practice, and are there limitations on what they can do? Notwithstanding any rule of this Court to the contrary, after July 1, 2004, any person employed in Virginia as a lawyer exclusively for a for-profit or a non-profit corporation, association, or other business entity, including its subsidiaries and affiliates, that is not a government entity, and the business of which consists solely of lawful activities other than the practice of law or the provisions of legal services ( Employer ), for the primary purpose of providing legal services to such Employer, including one who holds himself or herself out as in-house counsel, corporate counsel, general counsel, or other similar title indicating that he or she is serving as legal counsel to such Employer, shall either (i) be a regularly admitted active member of the Virginia State Bar; (ii) be issued a Corporate Counsel Certificate as provided in Part I of this rule and thereby become an active member of the Virginia State Bar with his or her practice limited as provided therein; or (iii) register with the Virginia State Bar as provided in Part II of this rule; provided, however, no person who is or has been a member of the Virginia State Bar, and whose Virginia License, at the time of application, is revoked or suspended, shall be issued a Corporate Counsel Certificate or permitted to register under this Rule. Va. Rule 1A:5. Without becoming members of the Virginia bar, Maria can qualify as a Virginia Corporate Counsel, and Kurt can register as a Corporate Counsel Registrant. Virginia Corporate Counsel: 13

17 o Open to lawyers admitted to the practice of law in a state (other than Virginia), or territory of the United States, or the District of Columbia. Id. Part I(a). o The practice of a lawyer certified pursuant to Part I of this rule shall be limited to practice exclusively for the Employer furnishing the affidavit required by Part I(b)(3) of this rule, including its subsidiaries and affiliates, and may include appearing before a Virginia court or tribunal as counsel for the Employer. Id. Part I(f). Corporate Counsel Registrant: o Open to lawyers who may also become Virginia Corporate Counsel and [a] person admitted to the practice of law only in a country other than the United States, and who is a member in good standing of a recognized legal profession in that country, the members of which are admitted to practice law as lawyers, counselors at law, or the equivalent, and are subject to effective regulation and discipline by a duly constituted professional body or public authority[.] Id. Part II(a). o Requires oath that registrant (i)... will at no time undertake to represent his or her Employer or any other person, organization, or business entity before a Virginia court or tribunal... (ii) his or her work is limited to business and legal services related to issues confronting his or her Employer at a regional, national or international level with no specific nexus to Virginia, and (iii) he or she will not provide legal advice or services to any person other than his or her Employer. Id. Part II(b)(1). Kurt has transferred to Acme s Bethesda headquarters and become a member of the Maryland bar. From his office in Bethesda, he regularly provides advice regarding Virginia and federal law to employees working in Acme s Reston office. Has Kurt engaged in the unauthorized practice of law in Virginia? No, A non-virginia lawyer may render advice in a foreign jurisdiction to clients residing in Virginia on matters not concerning Virginia law. In fact, [the Virginia UPL] Committee would not have jurisdiction over any activity performed by you outside the Commonwealth of Virginia. Virginia UPL Opinion 122. Acme has two wholly-owned subsidiaries in Virginia. Acme wishes to transfer rights to certain intellectual property from one subsidiary to the other. Kurt meets with employees from the subsidiaries in his Bethesda office, prepares the necessary documents there, and the subsidiaries close on the transaction at the Bethesda headquarters. Has Kurt engaged in the unauthorized practice of law in Virginia? 14

18 No. [T]he preparation of legal documents in the District of Columbia by an attorney licensed to practice in the District of Columbia, absent any actual activity by the attorney in Virginia, does not constitute the unauthorized practice of law in Virginia. Virginia UPL Opinion 99. Kurt primarily works out of his Bethesda office, although he will occasionally travel to Acme s Virginia office, where he sometimes conducts investigations, prepares documents, and interviews employees. Are Kurt s activities in Virginia permissible? Yes. Virginia UPL Opinion Regarding foreign attorneys based in offices outside Virginia, explains: The certificate and registration requirements of this rule apply only to lawyers not licensed in Virginia who are working in Virginia as corporate counsel, in-house counsel, general counsel, etc. When these lawyers provide advice and counsel regarding Virginia law to employees of the financial institution employer located in branches in Virginia, they are not engaged in unauthorized practice. When they are providing the advice either from their offices outside of Virginia or when they visit the branches in-person in Virginia, this constitutes advising their regular employer which is permitted under Part 6, I (B)(1) of the Rules of the Virginia Supreme Court. Should they have to prepare documents in either situation, again, these lawyers are providing this legal service only to their regular employer which is permitted under Part 6, I (B)(2). These lawyers also fall within the scope of the temporary practice provisions of Part 6, I (C). They represent the employer elsewhere and have occasion to have to come into Virginia in relation to that representation. 2. Maryland Maria has decided to take an opportunity to transfer from Acme s Reston office to the Bethesda headquarters. Maria is still a member in good standing of the Puerto Rico bar, and she does not want to sit through the Maryland attorneys exam. Can she practice law as in-house counsel in Maryland? Yes. An attorney admitted in another United States jurisdiction, and not disbarred or suspended from practice in any jurisdiction, may provide legal services in this jurisdiction that: (1) are provided to the attorney s employer or its organizational affiliates and are not services for which the forum requires pro hac vice admission; or (2) are services that the attorney is authorized to provide by 15

19 federal law or other law of this jurisdiction. Md. Rule (d) (emphasis added). Note regarding temporary practice in Maryland: An attorney admitted in another United States jurisdiction, and not disbarred or suspended from practice in any jurisdiction, may provide legal services on a temporary basis in this jurisdiction that: (1) are undertaken in association with an attorney who is admitted to practice in this jurisdiction and who actively participates in the matter; (2) are in or reasonably related to a pending or potential proceeding before a tribunal in this or another jurisdiction, if the attorney, or a person the attorney is assisting, is authorized by law or order to appear in such proceeding or reasonably expects to be so authorized; (3) are in or reasonably related to a pending or potential arbitration, mediation, or other alternative dispute resolution proceeding in this or another jurisdiction, if the services arise out of or are reasonably related to the attorney s practice in a jurisdiction in which the attorney is admitted to practice and are not services for which the forum requires pro hac vice admission; or (4) are not within subsections (c)(2) or (c)(3) of this Rule and arise out of or are reasonably related to the attorney s practice in a jurisdiction in which the attorney is admitted to practice. Rule (c). An attorney admitted in another United States jurisdiction, and not disbarred or suspended from practice in any jurisdiction, may provide legal services in this jurisdiction that: (1) are provided to the attorney s employer or its organizational affiliates and are not services for which the forum requires pro hac vice admission; or (2) are services that the attorney is authorized to provide by federal law or other law of this jurisdiction. Md. Rule (d). Subsection (c)(3) of this Rule permits an attorney admitted to practice law in another jurisdiction to perform services on a temporary basis in this jurisdiction if those services are in or reasonably related to a pending or potential arbitration, mediation, or other alternative dispute resolution proceeding in this or another jurisdiction, if the services arise out of or are reasonably related to the attorney's practice in a jurisdiction in which the attorney is admitted to practice. The attorney, however, must obtain permission pro hac vice in the case of a court-annexed arbitration or mediation or otherwise if court rules or law so require. 16

20 Appearing and participating in an arbitration as counsel requires Special Admission for out-of-state attorneys by the circuit court for the county in which the arbitration hearing is to be held or [by] any other circuit court in which an action to review an arbitral award entered by the arbitrator or panel may be filed. Rule of the Rules Governing Admission to the Bar of Maryland. 3. District of Columbia Of the three metro area jurisdictions, the District of Columbia has the most permissive provisions regarding the activity of foreign-licensed in-house counsel, arbitration, and temporary practice. The following activity in the District of Columbia is excepted from the prohibitions [against the unauthorized practice of law] provided the person is not otherwise engaged in the practice of law or holding out as authorized or competent to practice law in the District of Columbia:... (6) Internal Counsel. Providing legal advice only to one s regular employer, where the employer does not reasonably expect that it is receiving advice from a person authorized to practice law in the District of Columbia. (12) Practice in ADR Proceedings. Providing legal services in or reasonably related to a pending or potential arbitration, mediation, or other alternative dispute resolution ( ADR ) proceeding, provided: The person is authorized to practice law by the highest court of a state or territory or by a foreign country, and is not disbarred or suspended for disciplinary reasons and has not resigned with charges pending in any jurisdiction or court. The person may begin to provide such services in no more than five (5) ADR proceedings in the District of Columbia per calendar year. The person does not maintain or operate from an office or location for the practice of law within the District of Columbia or otherwise practice or hold out to practice law in the District of Columbia, unless that person qualifies under another express exception provided in section (c) hereof. 17

21 (13) Incidental and Temporary Practice. Providing legal services in the District of Columbia on an incidental and temporary basis, provided that the person is authorized to practice law by the highest court of a state or territory or by a foreign country, and is not disbarred or suspended for disciplinary reasons and has not resigned with charges pending in any jurisdiction or court. D.C. Ct. App. Rule 49(c). III. JOINT REPRESENTATIONS ISSUES WHAT HAPPENS WHEN THE EMPLOYEE SUES BOTH THE COMPANY AND THE BOSS PERSONALLY Depending on the particular situation (and jurisdiction), an employee may file a claim against the company seeking redress for alleged wrongdoing, but may also include as a defendant the particular employee or supervisor at the heart of the alleged wrongdoing. In such situations, it is not uncommon for an attorney to be called upon to represent both a company and an employee, such as an officer, who has been accused of employment law violations. Such a joint representation plainly raises the specter of conflicts of interest between the company and the employee. While there is no per se rule in Virginia prohibiting a joint representation, such a representation can be problematic in a number of ways. At the outset, the attorney must determine whether a potential for conflict exists and, if so, obtain the informed consent of both clients to waive the conflict. Virginia Rule of Professional Conduct Conflict of Interest: General Rule. (a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if: (1) the representation of one client will be directly adverse to another client; or (2) there is significant risk that the representation of one or more clients will be materially limited by the lawyer s responsibilities to another client, a former client or a third person or by a personal interest of the lawyer. (b) Notwithstanding the existence of a concurrent conflict of interest under paragraph(a), a lawyer may represent a client if each affected client consents after consultation, and: 18

22 (1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client; (2) the representation is not prohibited by law; (3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and (4) the consent from the client is memorialized in writing. What is required to obtain informed consent, i.e. consent after consultation, is not defined in the rules. The District of Columbia bar has, however, adopted a joint statement of facts test, which can inform the consultation required to obtain an effective waiver. District of Columbia Joint Statement of Facts Test (1) The co-parties agree to a single comprehensive statement of facts describing the occurrence. (2) The attorney reviews the statement of facts from the perspective of each of the parties and determines that it does not support a claim by one against another. (3) The attorney determines that no additional facts are known by each party which might give rise to an independent basis of liability against the other or against themselves by the other. (4) The attorney advises each party as to the possible theories of recovery which each may be foregoing through this joint representation based on the disclosed facts. (5) Each party agrees to forego any claim or defense against the other based on the facts known by each at the time. (6) Each party agrees that the attorney is free to disclose to the other party, at the attorney's discretion, all facts obtained by the attorney. (7) The attorney outlines potential pitfalls in multiple representation and advises each party of the opportunity to seek the opinion of independent counsel as to the advisability of the proposed multiple representation; and, each either consults separate counsel or advises that no separate consideration is desired. 19

23 (8) Each party acknowledges that the facts not mentioned now but later discovered may reveal differing interests, which, if they do not compromise these differences, may require the attorney to withdraw from the representation of both without injuring either. (9) Each party agrees that the attorney may represent both in the litigation. District of Columbia Bar, Opinion No. 140 (July 7, 1984). Additional considerations may arise during the course of the representation, which could impede the attorney s ability to provide competent and diligent representation to each affected client, rendering the conflict non-waivable. 1.During the course of the representation, substantial discrepancy in the parties testimony, incompatibility in positions in relation to an opposing party or the fact that there are substantially different possibilities of settlement of the claims or liabilities in question. Rule 1.7 Comment As to the duty of confidentiality, continued common representation will almost certainly be inadequate if one client asks the lawyer not to disclose to the other client information relevant to the common representation. Id. Comment At the outset of the representation, one client has withheld information that is material to the representation, such that the waiver was based on an incomplete understanding of material facts. See id. 4.Clients assume materially different or adverse stances with respect to the settlement of claims. Where a conflict arises between jointly represented clients during the course of the representation, [o]rdinarily, the lawyer will be forced to withdraw from representing all of the clients if the common representation fails. Id. In limited circumstances, Rule 1.9 would permit the continued representation of one client, with informed consent and waiver, where a conflict has arisen between jointly represented clients: Virginia Rule of Professional Conduct Rule Conflict of Interest: Former Client (a) A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the 20