Going Native: Incentive, Identity and the Inherent Ethical Problem of In-House Counsel
43 Pages Posted: 20 Jun 2011
Date Written: June 20, 2011
Corporate legal departments have undergone a significant transformation over the past three decades, growing in size and influence, as well as the scope and complexity of their duties. This trend has highlighted the fact that in-house counsel are, by their very nature, unable to exercise the independent judgment that is the hallmark of the legal profession and a fundamental ethical requirement for all attorneys. This tension is omnipresent in the myriad roles which in-house counsel play as advisor, advocate and gatekeeper.
Scholarship examining the independence dilemma for the in-house attorney has generally attributed the problem to one of two broad causes: incentive or identity. First, the structure within which in-house counsel are employed, compensated, assessed and rewarded creates incentives for attorneys to comply with corporate objectives, rather exercise independent legal judgment. Second, through years of working solely within one corporation, in-house counsel develops an identity that is more closely aligned with the organization than with his profession. This results in cognitive biases which impair the attorney’s independent judgment.
This article seeks to build on the earlier scholarship, which addressed either the causative influence of incentive or that of identity, by examining the complex interplay between the two and the intractable ethical conflict that results. Concluding that the independence problem of is likely not resolvable under the current corporate legal department model, the article proposes broad reforms that would effectively eliminate the role of in-house counsel by: a) utilizing instead firm attorneys who would be seconded to the company for a finite period of time; and b) creating business legal advisory positions within companies that would not be subject to the same ethical rules as practicing attorneys and would not enjoy the protection of attorney-client privilege in their communications. Such a solution would help to ensure that corporations receive the objective advice they require and that the most fundamental of attorney ethical obligations – that of independence – is preserved.
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