Issue: Gatekeeper Liability

Significance: Gatekeeper liability (i.e., holding in-house counsel culpable for the conduct of their clients) criminalizes the practice of law. Not only does it profoundly misunderstand the lawyer-client relationship, gatekeeper liability also undermines the very objective it seeks to accomplish, namely, enhancing compliance with the law.

Description: Professional ethics for lawyers used to be all about what lawyers should and should not do as they represent their clients. The cry of “where were all the lawyers?” in response to any major corporate debacle places corporate counsel in the crosshairs of “gatekeeper” and liability concerns, suggesting that lawyers should be responsible not only for their own behavior and standards, but also for those of their clients. Of course, if one of our members or another in-house counsel is individually responsible, we don’t defend that type of conduct. Bad apples should be punished appropriately.

But ACC is dedicated to representing our members and other in-house lawyers from zealous prosecutors who confuse the practice of law — and the underlying attorney-client relationship — with being just another employee or executive. In addition, we aim to provide analysis of these trends and practical suggestions to help you navigate the difficult path of balancing your role as zealous advocate, judicious and confidential counselor, compliance and business conduct leader, and ethical gatekeeper responsible for enterprise risk management.

The most prominent example in recent years of this wrongheaded approach is the case of Lauren Stevens. Below is a one-on-interview that we conducted in front of over 1,600 attendees at the 2013 ACC Annual Meeting. Every in-house lawyer should watch this program to learn not only about rogue prosecutors, but also about how Stevens overcame being indicted, not just once, but twice (ultimately being acquitted by the judge of all charges).


 

Frequently Asked Questions

Q: Do you think in-house lawyers are special and above the law?
A: Absolutely not. If in-house lawyers have done something wrong themselves, they should be treated like anybody else. However, when one acts as a lawyer for another individual or entity and it is the client who’s accused of the underlying misconduct, the government should focus on the client’s alleged wrongdoing, not on the lawyer’s good-faith representation.

Q: Why shouldn’t in-house lawyers be held responsible as gatekeepers, as that might enhance corporate compliance?
A: That argument is superficially appealing, but it is deeply counterproductive to hold corporate counsel criminally, or civilly, liable for conduct they do not control. As with most things in this context, the analysis begins with the ethics rules. In jurisdictions across the developed world, lawyers are called to zealously represent their clients within the confines of the law. Those lawyers are obligated to counsel their clients about the law, among other things, but they are not responsible for making the underlying decisions, which belong to the client alone.

Moving beyond the ethics rules, if in-house counsel are essentially deputized within an organization, employees might be less candid with them about alleged misconduct or might not even approach them at all. Rather, that misconduct might fester or mushroom into something even more deleterious. In response to this dynamic, the government might then try to hold in-house counsel responsible for what they should have known, but unfortunately, that type of arbitrary liability would only persuade the best among us to seek another less-dangerous profession.

Gatekeeper Liability Advocacy

ACC Files Letter Urging UK Financial Conduct Authority to Omit Head of Legal Function from Senior Managers Regime

  • ACC Position: 

    On January 9, 2017, ACC submitted a letter to the United Kingdom Financial Conduct Authority (FCA) in response to regulations including the head of the legal function in the Senior Managers Regime (SMR). ACC argues the effort, aimed increasing accountability … Continue reading

FILING UPDATE: NYDFS Affirms ACC’s Position Against Criminal Liability for Compliance Officers

  • ACC Position: 

    The New York Department of Financial Services (NYDFS) affirmed ACC’s position on criminal liability for compliance officers in recently released anti-money laundering regulations. NYDFS significantly changed the compliance officer certification requirements, to which ACC had objected in a comment letter … Continue reading

ACC Files Comments Opposing Criminal Liability for Chief Compliance Officers

  • Issue:  Proposed rules changes to impose criminal liability on chief compliance officers for failure to meet new annual certification requirements
  • Court:  New York Department of Financial Services (DFS)
  • Date of Filing:  03/31/2016

  • ACC Position: 

    On March 31, 2016, ACC, its Compliance & Ethics Committee, Financial Services Committee, New York chapters, and 74 general counsel and compliance officers filed comments objecting to a proposal by the New York Department of Financial Services (DFS) to impose … Continue reading

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