This panel was convened at 9:00 a.m., Friday, March 25, by its moderator, David Nersessian of Boston University School of Law, who introduced the panelists: Sarah Altschuller of Foley Hoag LLP; Rachel Davis of the Harvard Kennedy School and the Office of the UN Special Representative for Business and Human Rights; Alexandra Guaqueta of Flinders University, School of International Studies; and Patrick Keenan of the University of Illinois School of Law.
ETHICAL RISKS, CORPORATE LAWYERS, AND HUMAN RIGHTS
By David Nersessian
The interplay between business and human rights presents a complex mixture of challenges for corporate lawyers. Human rights law is premised on fundamental questions of morality and the highest aspirations of human endeavor. But such aspirations mean little unless they actually are implemented in day-to-day affairs. The "operationalization" of human rights principles in the commercial realm requires a pragmatic distillation of broad normative statements into manageable (and observable) business conduct.
Corporate lawyers can play a key role in this process, helping business clients to develop standards and create appropriate compliance frameworks to address the unique global risks that human rights present. But they must continue to meet their ethical obligations as legal professionals when they do so. Since the UN Special Representative's recent guidelines on business and human rights (1) concentrate largely on operational issues, my remarks as moderator today focus on these challenges as well.
Corporate lawyers increasingly are called upon to manage new dimensions of ethical risk in a rapidly globalizing business environment. This applies not only to personal risk (an individual lawyer's compliance with ethical rules), but also to ethical risks at the enterprise-level for organizations--law firms and legal departments that serve clients in this area. While hardly comprehensive, the topics covered today relate to three distinct areas:
(1) ethical risks inherent in the object of the legal representation itself.
(2) ethical risks to the lawyer's obligations of professional secrecy.
(3) ethical risks arising from the conduct of other lawyers.
The Object of Representation
The first area of ethical risk derives from the fundamental principle that lawyers cannot assist clients in crimes or fraud. (2) Human rights violations unquestionably constitute serious crimes. Acts of torture, war crimes, genocide, and the like violate both international and domestic law whether committed by public or private actors. Ironically, allegations of corporate interests perpetrating such crimes often arise in civil claims under the Alien Tort Statute. (3) However, apart from ATS liability, the Nuremberg progeny make clear that lawyers and corporate officials are subject to individual criminal prosecution when legal frameworks (4) or commercial endeavors (5) become instruments of international crimes. (6)
Apart from the risks of civil liability and criminal prosecution, however, criminal conduct also provides grounds for professional discipline. (7) Lawyers also must withdraw immediately upon learning that continuing legal representation would result in a crime or in professional misconduct. (8)
Confidentiality and Professional Secrecy
The second dimension of ethical risk relates to professional secrecy. The lawyer-client relationship includes special protections for communications (the attorney-client privilege), (9) documentation (work product immunity), (10) and other forms of information relating to the representation. (11) But such protections do not apply to illegal or fraudulent conduct. Special rules require lawyers to disclose confidences to prevent or rectify fraud on a tribunal (12) and in some other situations to avoid assisting a client's crime or fraud. (13) The attorney-client privilege also does not attach to communications where clients seek to further criminal ends through the lawyer's services, even when the lawyer is unaware of the client's intentions. (14)
Discretionary rules also allow corporate lawyers to reveal confidential information in some circumstances; for example, to prevent reasonably certain death or serious bodily injury. (15) Presumably this discretion would apply to wide-scale human rights violations committed in the course of business activities. (16) The policy underlying this exception is the "overriding value of life and physical integrity," such that lawyers can disclose under the Model Rules even when the client is not responsible for the harm in question. (17)
The applicable standards vary by jurisdiction, however. Some limit disclosure either to criminal conduct perpetrated by the client or to cases involving imminent death or substantial bodily injury (or both). (18) Other jurisdictions require lawyers to report such threats. (19) The wide variation in confidentiality exceptions underscores the importance of counsel determining, at the earliest possible stage, which jurisdiction's ethical rules apply to the representation in question.
Special rules apply when a corporate lawyer represents an organizational client (as they often do). The client is the entity itself, not its individual officers, directors, or employees. (20) Lawyers who become aware that a corporate agent is breaching a duty to the organization, is violating the law in a way that could be imputed to the organization, or is engaging in conduct likely to harm the organization must report that conduct to senior corporate officials. (21) If upward reporting within the organization fails to prevent or mitigate the conduct, a lawyer may report outside the organization to the extent necessary to prevent substantial injury to the organization itself. (22)
The Conduct of Others
Corporate lawyers rarely act alone, and the final area of ethical risk arises in situations where lawyers fail to properly address misconduct by others. Law firm partners and managerial lawyers in legal departments, for example, have special obligations to implement appropriate systems to ensure ethical compliance within the organization. (23) Lawyers at all levels must appropriately supervise junior attorneys and staff in order to ensure that their conduct meets the appropriate professional standards. (24)
Misconduct that a corporate lawyer simply learns about can create reporting obligations even when no supervisory or other relationship exists. As the front line of enforcement in a self-governing profession, the Model Rules require the reporting of other lawyers whenever their conduct "raises a substantial question as to that lawyer's honesty, trustworthiness or fitness as a lawyer in other respects...." (25) A knowing failure to report itself constitutes misconduct. (26)
A final point is that ethical risks are not static considerations. Continual reassessment is necessary, particularly when the business representation is connected to an unstable geopolitical environment. The current (March 2011) situation in Libya is a good example. Once-lawful business activity with Libyan interests has been substantially curtailed by virtue of United Nations sanctions (27) and domestic regimes to enforce them. (28) Corporate lawyers must proactively analyze not only how such developments affect their business clients, but also how these shifts impact themselves, their colleagues, and the ethical standards they must uphold as legal professionals.
By David Nersessian, of Boston University School of Law.
(1) See Rep. of the Special Representative of the Secretary General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises, U.N. Doc. A/HRC/17/31 (Mar. 21,2011).
(2) See, e.g., MODEL RULES OF PROF'L CONDUCT [hereinafter MR] R. 1.2(d), 8.4(b).
(3) See Alien Tort Claims Act, 28 U.S.C. [section] 1350.
(4) See Prosecutor v. Alstotter (Case No. 3), 3 TRIALS OF WAR CRIMINALS 1 (U.S. Mil. Trib. 1949) (German judges and prosecutors); Prosecutor v. von Weizsaecker (Case No. 11), 14 TRIALS OF WAR CRIMINALS 1 (U.S. Mil. Trib. 1949) (lawyers in German ministries).
(5) See Prosecutor v. Krauch (Case No. 6), 7 TRIALS OF WAR CRIMINALS 1 (U.S. Mil. Trib. 1948), Prosecutor v. Krupp (Case No. 10), 9 TRIALS OF WAR CRIMINALS 1 (U.S. Mil. Trib. 1948); Prosecutor v. Flick (Case No. 5), 6 TRIALS OF WAR CRIMINALS 3 (U.S. Mil. Trib. 1947) (cases against German industrialists).
(6) See, e.g., Prosecutor v. Van Anraat, Judgment, The Hague Court of Appeal (Neth.), Case No. LJN-BA4676 (May 9, 2007) (finding corporate executive who supplied chemical weapons materials to Saddam Hussein guilty of complicity in violations of the laws and customs of war).
(7) See MR 8.4(b).
(8) See MR 1.16(a)(1) (prohibiting representation that requires a lawyer to violate ethical rules or other laws). Other rules allow permissive withdrawal. See, e.g., MR 1.16(b)(2), 1.16(b)(3) (client crimes involving the lawyer's services); MR 1.16(b)(4) (conduct that the lawyer finds repugnant or with which counsel has a fundamental disagreement); MR 1.16(b)(7) (other good cause).
(9) See, e.g., Upjohn Co. v. United States, 449 U.S. 383 (1981) (corporate attorney-client privilege). Not all nations recognize the corporate privilege to the same extent, however. See, e.g., Case No. C-550/07-P, Akzo Nobel Chems. Ltd. v. United Kingdom, Judgment of Sept. 14, 2010 (E.C.J. 2010) (professional secrets privilege does not apply to in-house lawyers). Obviously, this disparity presents significant concerns if foreign law governs professional secrecy in a particular corporate matter. See, e.g., MR 8.5 cmt. 7 (including "transnational practice" in choice of law analysis).
(10) See, e.g., FED. R. Civ. P. 26(b)(3) (heightened protection for attorney's mental impressions and opinion work product).
(11) See, e.g., MR 1.6(a) (broad protection covering "information relating to the representation of a client").
(12) See MR 3.3(a)(3), 3.3(b).
(13) See MR 4.1(b)...