The Ethical Landmines of Dual Service: United States v. Holmes
| Author | Sabrina Elliott |
| Position | J.D., Georgetown University Law Center (expected May 2023); B.A. University of California, Los Angeles (June 2020) |
| Pages | 669-686 |
The Ethical Landmines of Dual Service: United
States v. Holmes
SABRINA ELLIOTT*
INTRODUCTION
The legal profession has long debated whether lawyers should be allowed to
engage in dual service, or represent corporations and also serve on their boards of
directors.
1
In ABA Formal Ethics Opinion 98-410 (Opinion 410) issued in 1998,
the Formal Committee on Ethics and Professional Responsibility held that there
is no prohibition against lawyers serving on the board of directors of a corpora-
tion that they, or their firm, represents.
2
Indeed, the ABA Model Rules of
Professional Conduct (“Model Rules”) allow for this dual service.
3
While
Opinion 410 does include a cautionary comment that a lawyer must evaluate
whether the responsibilities of the two roles might conflict, neither the opinion
nor the Model Rules provide clear guidance for lawyers about how to handle such
conflicts. While there are benefits to this dual service, including the ability of the
attorney to offer more comprehensive legal advice, this practice still warrants
concern because of its vast ethical implications. Nonetheless, it is still a wide-
spread practice.
4
Robert Swaine of New York’s Cravath, Swaine & Moore once
notably stated that while “most of us would be greatly relieved if a canon of ethics
were adopted forbidding a lawyer in substance to become his own client through
* J.D., Georgetown University Law Center (expected May 2023); B.A. University of California, Los
Angeles (June 2020). © 2022, Sabrina Elliott.
1. See, e.g., Micalyn S. Harris & Karen L. Valihura, Outside Counsel as Director: The Pros and Potential
Pitfalls of Dual Service, 53 A.B.A. BUS. LAW. 480 (February 1998).
2. ABA Comm. on Ethics and Prof’l Responsibility, Formal Op. 98-410 (1998).
3. See MODEL RULES OF PROF’L CONDUCT R. 1.7 cmt. 35 (2018) [hereinafter MODEL RULES]:
A lawyer for a corporation or other organization who is also a member of its board of directors
should determine whether the responsibilities of the two roles may conflict. The lawyer may be
called on to advise the corporation in matters involving actions of the directors. Consideration
should be given to the frequency with which such situations may arise, the potential intensity of
the conflict, the effect of the lawyer’s resignation from the board and the possibility of the corpora-
tion’s obtaining legal advice from another lawyer in such situations. If there is material risk that
the dual role will compromise the lawyer’s independence of professional judgment, the lawyer
should not serve as a director or should cease to act as the corporation’s lawyer when conflicts of
interest arise. The lawyer should advise the other members of the board that in some circumstances
matters discussed at board meetings while the lawyer is present in the capacity of director might
not be protected by the attorney-client privilege and that conflict of interest considerations might
require the lawyer’s recusal as a director or might require the lawyer and the lawyer’s firm to
decline representation of the corporation in a matter.
4. See Craig C. Albert, The Lawyer-Director: An Oxymoron?, 9 GEO. J. LEGAL ETHICS 413, 415 (1996)
(“Outside counsel serve as directors of more than one in six public companies in the United States.”).
669
acting as a director or ofcer of a client .. . the practice is too widespread to permit
any such expectation.”
5
And yet, as former Supreme Court Justice Potter Stewart
warned, “there are signicant ethical issues implicated by such dual service’s inter-
twining ‘the function of the lawyer in giving professional counsel’ and ‘the function
of corporate management . . . in the prot-making interests of its stockhold-
ers.’”
6
While the ABA has yet to, and likely will not, ban the practice, it has
consistently skirted the issue of what to do when inevitable conicts arise as a
consequence of this dual service.
7
Some of these conicts include privilege
and condentiality challenges, which can lead to potential conicting duties
owed to the corporation.
The debate surrounding dual service has recently been reinvigorated given a nota-
ble case in the media: United States v. Holmes.
8
Elizabeth Holmes founded and served
as chairman of the board of directors of Theranos, a now defunct health technology
company.
9
Theranos “was a private health care and life sciences company with the stated mission to revolutionize
medical laboratory testing through allegedly innovative methods for drawing blood, testing blood, and inter-
preting the resulting patient data.” Holmes was charged with two counts of conspiracy to commit wire fraud
and nine counts of wire fraud. It is alleged that she “engaged in a multi-million-dollar scheme to defraud invest-
ors, and a separate scheme to defraud doctors and patients.” United States v. Elizabeth Holmes, et al., DEPT. OF
JUSTICE, https://www.justice.gov/usao-ndca/us-v-elizabeth-holmes-et-al [https://perma.cc/ATJ7-LDXU].
She was convicted of wire fraud and conspiracy, and her trial ended in
January 2020 after nearly four months of testimony.
10
David Boies, prominent litiga-
tor, and chairman of his own law firm, both served on the board of Theranos and as
the company’s attorney.
11
Steven Davidoff Solomon, David Boies’s Dual Roles at Theranos Set Up Conflict, N.Y. TIMES (Feb. 2,
2016), https://www.nytimes.com/2016/02/03/business/dealbook/david-boiess-dual-roles-at-theranos-set-up-
conflict.html?ref=dealbook&r=0 [https://perma.cc/LZ7C-UBRK].
At trial, Boies was called to testify, and Holmes argued that
all communication between Boies and herself was privileged under the doctrine of at-
torney-client privilege.
12
This controversy reminded those in the legal profession of
the vast attorney-client privilege issues that arise when a lawyer both represents a
company, either private or public, and serves on its board of directors.
This Note will argue that the ABA needs to provide updated practical guidance
on how lawyers should ethically navigate the attorney-client privilege and confi-
dentiality challenges that emerge when serving as both legal counsel and as a
5. Robert T. Swaine, Impact of Big Business on the Profession: An Answer to Critics of the Modern Bar, 35
A.B.A. J. 89, 170 (1949).
6. D.C. Bar Ass’n Comm. on Prof’l Ethics, Formal Op. 382 (2021) (citing Potter Stewart, Professional
Ethics for the Business Lawyer: The Morals of the Market Place, 31 BUS. LAW. 463, 464 (1975)).
7. See Albert, supra note 4, at 425 (“When the American Bar Association (ABA) was reformulating the
rules governing lawyer conduct in the late 1970s and early 1980s, 62 members of the bar debated whether the
new rules should contain a provision prohibiting the dual role as an impermissible conflict of interest. Not sur-
prisingly, the successive drafts of the Model Rules of Professional Conduct (Model Rules) paint a telling picture
of pressure within the bar to bury the issue”); see also Martin Riger, The Model Rules and Corporate Practice –
New Ethics for a Competitive Era, 17 CONN. L. REV. 729, 743 (1985).
8. United States v. Elizabeth A. Holmes, 18-CR-00258-EJD (N.D. Cal. 2022).
9.
10. Id.
11.
12. Order Granting Pl. [‘s] Mot. to Determine that Def. Lacks Individual Privilege Interest in Disputed Doc.
1, ECF No. 812.
670 THE GEORGETOWN JOURNAL OF LEGAL ETHICS [Vol. 35:669
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