Ethics in BigLaw Forum

[Kochel]

Most client matters requiring legal advice are at most indirectly related to the client's "profits"

Zuh?

Outside of individuals and governments/non-profit organizations (which are hardly the biggest BigLaw clients), I'm pretty sure every legal matter is about nothing but profits. if a corporation has a legal issue, it can be boiled down to dollars and cents. Happily, the dollars and cents tend to be so large that a sizable amount of money can be spent on legal fees while still being savy business for the company.

Sorry, still incorrect. I spend most of my day reviewing matters relating to regulatory compliance or matters relating to my client's work as a fiduciary on behalf of investors. These matters routinely have nothing to do with dollars-and-cents; and when they do, I'm often responsible for making sure that "profits" takes a back seat to compliance or to the investors' best interests. I assure you that a large percentage of non-litigation Biglaw work is of this variety, because lawyers are risk managers as well as technical specialists. Almost any GC would unhesitatingly fire an in-house lawyer who thought his job was solely to maximize the company's revenues.

[clintonius]

Most client matters requiring legal advice are at most indirectly related to the client's "profits"

Zuh?

Outside of individuals and governments/non-profit organizations (which are hardly the biggest BigLaw clients), I'm pretty sure every legal matter is about nothing but profits. if a corporation has a legal issue, it can be boiled down to dollars and cents. Happily, the dollars and cents tend to be so large that a sizable amount of money can be spent on legal fees while still being savy business for the company.

Sorry, still incorrect. I spend most of my day reviewing matters relating to regulatory compliance or matters relating to my client's work as a fiduciary on behalf of investors. These matters routinely have nothing to do with dollars-and-cents; and when they do, I'm often responsible for making sure that "profits" takes a back seat to compliance or to the investors' best interests. I assure you that a large percentage of non-litigation Biglaw work is of this variety, because lawyers are risk managers as well as technical specialists. Almost any GC would unhesitatingly fire an in-house lawyer who thought his job was solely to maximize the company's revenues.

I'm not clear on what the investors' best interests would be, other than profit. I'm also not clear on the ethical issues you run into in telling a client "no" (your post, after saying my response was "void for vagueness," was no less opaque), or in helping the client form its position. If you're talking about advising the client against doing something illegal, I thought it went without saying that you don't endorse unlawful acts. Perhaps I wasn't clear, but I did not intend to imply that you should be bending or breaking rules/laws for the sake of profit.

[Kochel]

Most client matters requiring legal advice are at most indirectly related to the client's "profits"

Zuh?

Outside of individuals and governments/non-profit organizations (which are hardly the biggest BigLaw clients), I'm pretty sure every legal matter is about nothing but profits. if a corporation has a legal issue, it can be boiled down to dollars and cents. Happily, the dollars and cents tend to be so large that a sizable amount of money can be spent on legal fees while still being savy business for the company.

Sorry, still incorrect. I spend most of my day reviewing matters relating to regulatory compliance or matters relating to my client's work as a fiduciary on behalf of investors. These matters routinely have nothing to do with dollars-and-cents; and when they do, I'm often responsible for making sure that "profits" takes a back seat to compliance or to the investors' best interests. I assure you that a large percentage of non-litigation Biglaw work is of this variety, because lawyers are risk managers as well as technical specialists. Almost any GC would unhesitatingly fire an in-house lawyer who thought his job was solely to maximize the company's revenues.

I'm not clear on what the investors' best interests would be, other than profit. I'm also not clear on the ethical issues you run into in telling a client "no" (your post, after saying my response was "void for vagueness," was no less opaque), or in helping the client form its position. If you're talking about advising the client against doing something illegal, I thought it went without saying that you don't endorse unlawful acts. Perhaps I wasn't clear, but I did not intend to imply that you should be bending or breaking rules/laws for the sake of profit.

Ethics will often collide with the maximization of a client's profits. That's all I've been saying. Given some of the comments in this thread, it certainly doesn't go without saying that a lawyer shouldn't endorse unlawful acts. In addition, in many cases the line between legality and illegality is blurry.

A lawyer's job is not just about explaining the "law" to clients. It's also about making recommendations. It's about reducing risk. It's about monitoring conflicts of interest. All of these functions involve navigating ethical dilemmas. Do I recommend the aggressive approach to a regulatory question, or the conservative one? Do I allow or veto a proposal that could cause harm to a third party, thus giving rise to a legal claim? My point is that often the "ethical" or "right" answer is the one that does not maximize the client's profits. Naturally, communicating that answer is often difficult.

On the side point about investors, fiduciaries are required to place their clients' (in the case of investment advisers, their investors') interests ahead of their own. This will sometimes mean that the fiduciary's profit motive is not aligned with the client's best interest. The fiduciary's lawyer's job is to tell the client when it can't engage in certain types of self-dealing, or when it needs to disclose potentially embarrassing information. Pretty basic stuff.

[let/them/eat/cake]

Most client matters requiring legal advice are at most indirectly related to the client's "profits"

Zuh?

Outside of individuals and governments/non-profit organizations (which are hardly the biggest BigLaw clients), I'm pretty sure every legal matter is about nothing but profits. if a corporation has a legal issue, it can be boiled down to dollars and cents. Happily, the dollars and cents tend to be so large that a sizable amount of money can be spent on legal fees while still being savy business for the company.

Sorry, still incorrect. I spend most of my day reviewing matters relating to regulatory compliance or matters relating to my client's work as a fiduciary on behalf of investors. These matters routinely have nothing to do with dollars-and-cents; and when they do, I'm often responsible for making sure that "profits" takes a back seat to compliance or to the investors' best interests. I assure you that a large percentage of non-litigation Biglaw work is of this variety, because lawyers are risk managers as well as technical specialists. Almost any GC would unhesitatingly fire an in-house lawyer who thought his job was solely to maximize the company's revenues.

end goal of the position is still to maximize company revenues. if you don't think about it in terms of a one-off instance of the kind of work you are talking about, but its purpose more generally, ensuring regulatory compliance or proper proper fulfillment of fiduciary obligations is just another way of saying we are making sure the company or fiduciary doesn't screw the pooch, i.e. do some shit the result of which is going to be fines/lawsuits/loss of good will/any other noxious shit generally that has the effect of eating away at revenue and profit margins.

i'm doing too many things to write that more coherently lol

[clintonius]

Ethics will often collide with the maximization of a client's profits. That's all I've been saying. Given some of the comments in this thread, it certainly doesn't go without saying that a lawyer shouldn't endorse unlawful acts. In addition, in many cases the line between legality and illegality is blurry.

A lawyer's job is not just about explaining the "law" to clients. It's also about making recommendations. It's about reducing risk. It's about monitoring conflicts of interest. All of these functions involve navigating ethical dilemmas. Do I recommend the aggressive approach to a regulatory question, or the conservative one? Do I allow or veto a proposal that could cause harm to a third party, thus giving rise to a legal claim? My point is that often the "ethical" or "right" answer is the one that does not maximize the client's profits. Naturally, communicating that answer is often difficult.

On the side point about investors, fiduciaries are required to place their clients' (in the case of investment advisers, their investors') interests ahead of their own. This will sometimes mean that the fiduciary's profit motive is not aligned with the client's best interest. The fiduciary's lawyer's job is to tell the client when it can't engage in certain types of self-dealing, or when it needs to disclose potentially embarrassing information. Pretty basic stuff.

Ah, I passed over the "fiduciary for investors" part in your previous post -- thanks for clarifying, and that makes sense. I guess I'm still not clear on what we're calling "ethics" here. Can you clarify how, say, the aggressive vs. conservative approach is an ethical question? My understanding is that the aggressive may be pushing boundaries and lead to repercussions, but I am having trouble seeing why that is an ethical question as opposed to a legal or financial one.

[Kochel]

Most client matters requiring legal advice are at most indirectly related to the client's "profits"

Zuh?

Outside of individuals and governments/non-profit organizations (which are hardly the biggest BigLaw clients), I'm pretty sure every legal matter is about nothing but profits. if a corporation has a legal issue, it can be boiled down to dollars and cents. Happily, the dollars and cents tend to be so large that a sizable amount of money can be spent on legal fees while still being savy business for the company.

Sorry, still incorrect. I spend most of my day reviewing matters relating to regulatory compliance or matters relating to my client's work as a fiduciary on behalf of investors. These matters routinely have nothing to do with dollars-and-cents; and when they do, I'm often responsible for making sure that "profits" takes a back seat to compliance or to the investors' best interests. I assure you that a large percentage of non-litigation Biglaw work is of this variety, because lawyers are risk managers as well as technical specialists. Almost any GC would unhesitatingly fire an in-house lawyer who thought his job was solely to maximize the company's revenues.

end goal of the position is still to maximize company revenues. if you don't think about it in terms of a one-off instance of the kind of work you are talking about, but its purpose more generally, ensuring regulatory compliance or proper proper fulfillment of fiduciary obligations is just another way of saying we are making sure the company or fiduciary doesn't screw the pooch, i.e. do some shit the result of which is going to be fines/lawsuits/loss of good will/any other noxious shit generally that has the effect of eating away at revenue and profit margins.

i'm doing too many things to write that more coherently lol

I presume when you say "revenues" you mean "profits." Still, what you say about the ultimate link between risk management and profits might be true in theory, but in practice lawyers usually have little visibility into the ultimate cost of a lawsuit or enforcement action on a particular issue, and even less into potential damages from loss of reputation. It's posibly in some sense accurate that the existence of an in-house Legal Department is on the whole economically beneficial, but on a day-to-day basis, it's not accurate. Many of the decisions lawyers make about regulatory compliance, litigation avoidance, etc. are a net-negative to client from a profits perspective. And, actually, most companies acknowledge and value that reality.

[Kochel]

Ethics will often collide with the maximization of a client's profits. That's all I've been saying. Given some of the comments in this thread, it certainly doesn't go without saying that a lawyer shouldn't endorse unlawful acts. In addition, in many cases the line between legality and illegality is blurry.

A lawyer's job is not just about explaining the "law" to clients. It's also about making recommendations. It's about reducing risk. It's about monitoring conflicts of interest. All of these functions involve navigating ethical dilemmas. Do I recommend the aggressive approach to a regulatory question, or the conservative one? Do I allow or veto a proposal that could cause harm to a third party, thus giving rise to a legal claim? My point is that often the "ethical" or "right" answer is the one that does not maximize the client's profits. Naturally, communicating that answer is often difficult.

On the side point about investors, fiduciaries are required to place their clients' (in the case of investment advisers, their investors') interests ahead of their own. This will sometimes mean that the fiduciary's profit motive is not aligned with the client's best interest. The fiduciary's lawyer's job is to tell the client when it can't engage in certain types of self-dealing, or when it needs to disclose potentially embarrassing information. Pretty basic stuff.

Ah, I passed over the "fiduciary for investors" part in your previous post -- thanks for clarifying, and that makes sense. I guess I'm still not clear on what we're calling "ethics" here. Can you clarify how, say, the aggressive vs. conservative approach is an ethical question? My understanding is that the aggressive may be pushing boundaries and lead to repercussions, but I am having trouble seeing why that is an ethical question as opposed to a legal or financial one.

Good questions. In my view, some issues that normally would only be "legal" or "financial" questions become "ethical" questions when the lawyer's choice of answers is (or could appear to be) influenced by motivations other than that of giving the value-neutral "best" answer. Law firms, for instance, will often feel pressure to give their OK to a proposal that seems shady (or carries a big risk), because they fear getting fired for resisting too much. For in-house lawyers, the rewards/penalties associated with advice are even more personally felt.

Not to make a law school exam exercise about it, but think for instance of the recent Goldman CDO enforcement action. At its heart, the charges were about Goldman's non-disclosure of shorting activity by a third party (Paulson). Now we don't know much about what role Goldman's internal and external lawyers played in all this, but suppose you were one of these lawyers and you knew that Paulson was both helping set up the portfolio and planning to short the heck out of it. Would you insist that Goldman disclose this fact? Would you advise that Goldman disclose it, but only on page 250 of the offering memo (as opposed to somewhere more prominent)? Or would you take the defensible, but possibly aggressive, positions that the fact in question wouldn't be material and that Goldman had no duty to the other investors to broadcast its back-channel business deals? Note that there's no consensus among lawyers as to whether Goldman's non-disclosure constituted securities fraud.

Ultimately, Goldman will pay $500+ mm to the SEC and who knows how much more to other plaintiffs, and in the meantime has lost other business and seen its stock price drop. On the other hand, a lawyer who insisted on frank disclosure of the facts might have cost Goldman a profitable deal and have jeopardized his career as a result.

Obviously, this whole hypo rests on the assumption that there were lawyers who actually knew the relevant facts and made conscious decisions thereupon. But it's an interesting case. And it's not too much of a stretch to think of it as an "ethics" question.