By Erin Geiger Smith
Oct 5 (Reuters) - The nation's largest organization for
corporate counsel, concerned that prosecutors and regulators may
be targeting in-house counsel when their employers are in
trouble, has launched a project to document the frequency and
likelihood of such cases.
The Association of Corporate Counsel in recent weeks has
reached out to law firms asking them to relay information on the
experiences of their clients, said Amar Sarwal, the ACC's chief
"The government, regulators, perhaps even opposing counsel,
have a target on your back," Sarwal told a ballroom full of
in-house counsel attending the association's annual convention
in Orlando, Florida, on Monday.
There is no known data on how often, or in what manner,
in-house lawyers are ensnared by government investigations and
prosecutions. But there have been a handful of public ones in
recent years, including the Securities and Exchange Commission's
2010 administrative decision against the former general counsel
of Ferris, Baker Watt, a financial services firm, for failing to
supervise a broker, and the prosecution of a former top lawyer
for Purdue Pharma, who was convicted of failing to supervise
employees who made inappropriate statements relating to the drug
Corporate counsel have been especially fascinated by the
prosecution, beginning in 2009, of Lauren Stevens, a former
GlaxoSmithKline senior attorney, who was accused of making false
statements to the Food and Drug Administration.
A featured speaker at the Orlando gathering, Stevens
recounted to more than 1,000 in-house counsel how seven years
after advising Glaxo during an investigation, she was told she
would be indicted for making allegedly false statements to the
At the time, Stevens said she was preparing to visit her
college-age daughter in Europe.
"You've got to be kidding me," Stevens said she told the
colleague who informed her she was the target of a Justice
Department investigation. It was "unsettling to find myself
sitting in a federal courtroom as a defendant for what I
believed ... was doing my job," she said.
After the initial indictment was thrown out because
prosecutors inaccurately characterized one of her defenses to
the grand jury, Stevens was re-indicted and brought to trial in
2011. But before the case went to the jury, Maryland U.S.
District Judge Roger Titus dismissed it, criticizing the
prosecution for targeting Stevens for merely performing her
obligations as counsel. The Justice Department did not respond
to a request for comment.
Brien O'Connor, who did not attend the convention but who
represented Stevens throughout her ordeal, said he doubted that
there would be "a rash of new prosecutions." Still, the Stevens
saga resonated with the audience of in-house attorneys at the
conference. One lawyer even passed up a note to Stevens thanking
her on behalf of all of them for fighting the charges.
The government has developed a "strategy of prosecuting
gatekeepers" like in-house counsel, compliance officers and
auditors to send a message that those employees should
immediately report any wrongdoing to the government, Michael
Volkov said in a separate interview. A partner at LeClaireRyan
who specializes in white collar defense and internal
investigations, he did not attend the conference.
During her talk, Stevens spoke warmly both about her legal
team and Judge Titus, whom she said grasped what was at stake
for in-house attorneys. During the finger-printing and mug-shot
process that followed her indictment, she recalled one person in
the room saying to her "In all seriousness, this isn't going to
ruin your legal career, is it?"
Though Stevens is partially retired, she still does
consulting work for Glaxo.
The ACC's program to track the frequency of cases like
Stevens's is only the beginning of the association's attempts to
follow this issue, said Sarwal, the group's legal strategist.
Though he does not have a time frame for making the findings
public, he said he expects to have the first round of responses
within a few weeks.
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