Over the past twenty years, government agencies and
regulators have expanded their investigations of corporations
across a broad spectrum of industries. These investigations of
corporate wrongdoing have created a booming industry for big firm
white-collar lawyers representing publicly traded corporations. As a
corollary to this boom, small-firm and solo lawyers have taken on
the role of what has become known as “pool counsel.” Pool counsel
represent “pools” of witnesses involved in the same investigation.
These “pools” are, ideally, comprised of employees who have no
criminal exposure and have similar levels of involvement in, and
information about, the subject of the investigation.
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Pool representations are economical for the individuals and the
company. These representations also provide efficiency for the
government investigators by having one point of attorney contact
with a broad understanding of the matter. Despite these benefits,
pool representation is fraught with the dangers of conflicts,
disqualification, and violation of client confidences. To avoid these
dangers, pool counsel must be aware of the ethical rules that apply
and lay the groundwork to avoid them.
Of course, the first question with any concurrent representation
is: will the proposed representation involve a prohibited concurrent
conflict of interest? For example, will one member of the pool provide either direct or circumstantial evidence implicating another member? Or will the recollections of the pool members clash, raising credibility concerns for the potential clients? Are any of the pool
members eligible for testimonial immunity and how will that affect
the other members of the pool?
Rule of Professional Conduct 1.7 governs this analysis. Rule 1.7 (a)
prohibits a “concurrent conflict of interest” if:
- the representation of one client will be directly
adverse to another client; or, - there is a significant risk that the representation of
one or more clients will be materially limited by the
lawyer’s responsibilities to another client, a former
client or a third person or by a personal interest of
the lawyer.
The existence of a concurrent conflict is not the end of the analysis.
Rule 1.7 (b) and Comment 2 must be consulted to determine whether
the conflict is “consentable.” Rule 1.7 (b) permits the representation
if:
- the lawyer reasonably believes that the lawyer will be
able to provide competent and diligent representation to each affected client; - the representation is not prohibited by law;
- the representation does not involve the assertion of a
claim by one client against another client represented
by the lawyer in the same litigation or other
proceeding before a tribunal; and, - each affected client gives informed consent
Comment 2 to Rule 1.7 advises the lawyer to determine “whether
the representation may be undertaken despite the existence of
a conflict, i.e., whether the conflict is consentable.” A conflict is
“consentable” only if “the lawyer reasonably believes that the
lawyer will be able to provide competent and diligent representation
to each affected client.” If the lawyer believes that, they can explain
the nature of the conflict to the client, why it is not disqualifying,
and seek the client’s informed consent to continue with the
representation.
“Informed consent” is defined in RPC 1.0(e) as “the consent by
a person to a proposed course of conduct after the lawyer has
communicated adequate information and explanation about
the material risks of and reasonably available alternatives to the
proposed course of conduct.” I note that neither Rule 1.7(b) nor
Rule 1.0(e) require that informed consent be in writing. However,
I strongly advise that whenever a client’s informed consent is
required—get it in writing.
Another danger in representing multiple witnesses, and one
that directly relates to the question of whether a conflict is
consentable, is the effect of multiple representation on client
confidences and the risk of violating Rule 1.6. As you interview
each client, you will inevitably learn information that will affect
other clients—information that you cannot unlearn. Your duty
to represent each witness competently, as required by RPC 1.1 as
well as your duty to keep each client informed, as required by RPC
1.4, may require you to “use” this information to another client’s
benefit. Because of the nature of the “pool” representation, the
client must be willing to consent to this use or they cannot be part
of the pool. Such consent is not revokable.
Obviously, this is vastly different from an individual representation
when everything you learn about the client is confidential
information which you are prohibited from sharing. Before taking
on each representation, make sure that each client understands
how you may use, or disclose to other clients within the pool, the
client’s confidential information. With respect to the use of such
information, each client must understand that you will be able to
use his or her confidential information to the benefit of all pool
clients.
As to the disclosure of client confidences there are essentially
two choices. One, the client can agree that the attorney has the
discretion to determine which confidences will be disclosed. This
agreement waives privilege as between this client and the other
clients as to these disclosures. This also creates a risk that this waiver
may be invoked in a later civil or criminal proceeding. This risk must
be disclosed to each client prior to taking on the representation.
Alternatively, the client can require the attorney to obtain the
disclosing client’s consent before sharing any confidence with other
pool clients. However, where a client forbids the disclosure, and that
disclosure is necessary to the effective representation of another
client, a conflict has emerged which requires withdrawal from the
representation of one or both clients.
So now that we know the issues, how do you determine, whether
the proposed clients comprise a pool that is permissible now and
will endure through the investigation? Before you agree to take
on any representations, and before you even interview potential
clients, get as much information as you can from company counsel,
investigating counsel, and from publicly available documents. At the
least, you want to know where your clients are in the company’s
organizational chart, how long they have been at the company, what
their specific role in the investigation is, whether the government
has sought to interview them yet, whether any documents for which
they have been the custodian have been turned over and whether
those documents will be shared with you.
Of course, neither a “target” nor a “subject” of an investigation
is a candidate for pool counsel. Any individual with a real risk of
potential criminal liability should have their own counsel. Generally,
you want a group at the same level of authority; you don’t want
lower-level individuals who will be pointing figures at the higher level individuals in your group or vice versa. You also want to
know if the company counsel has had any communication with the
government as to whether a “pool” approach will be permissible
for certain groups of witnesses. If this hasn’t happened yet, you
can suggest that company counsel take that step before the client
interviewing process begins.
While some lawyers conduct initial meetings with the pool as a
group, I do not recommend this. It is safer to conduct interviews with
each client separately. These interviews must ensure that enough
information is gathered to determine whether the individual can
be part of the pool. But remember that each client interview is
governed by Rule 1.18. This Rule states that, “(e)ven when no clientlawyer relationship ensues, a lawyer who has learned information
from a prospective client shall not use or reveal information which
may be significantly harmful to that person, except as Rule 1.9
would permit with respect to information of a former client.” Thus,
you are treading the narrow path between finding out enough to
determine conflicts, without eliciting disqualifying information at
the start. Before the interviews are conducted, start by getting each
client’s permission to tell the other clients who the members of the
proposed pool are, as they are known at the outset. Because of the
Rule 1.18 limitations, you will also need the individual’s informed
consent to use the information you learn in the initial interview in
the later representation and to share it with the other members, if
necessary. If the prospective client balks at this, that raises a red flag
that may exclude that person from the pool.
In the initial interview, your most important job is to explain the
risks and benefits of the pool representation, emphasizing the risks.
You must err on the side of caution in doing this. Do not fear being
repetitious to ensure that the potential client fully understands.
Speak at the client’s level of sophistication. Let’s face it: pool counsel
gigs are good engagements with good payers. But do not let your
enthusiasm for the work lead you to downplay the risk to the client.
You will not feel comfortable, and you could do real harm to your
client and to yourself.
At a minimum, you must discuss the following:
• the danger of a conflict arising in the future, your
duty to continue to monitor for it and how it will be
handled if it arises;
• how you will handle the client’s confidential
information, including that the client’s consent to
the attorney’s use of confidential information for the
clients’ mutual benefit will not be revocable;
• how the attorney-client privilege will function
between and among the concurrently represented
clients;
• the fact that the corporation (or another third party)
will be paying the lawyer’s fees. You must ensure
that the client, and the payer both understand that,
despite the payment, the attorney-client relationship
and all its duties are between the client and the
lawyer, not the payer and the lawyer. The client must
give informed consent to this arrangement as well as
to the multiple representation.
• advise the client that they may wish to consult with
another lawyer on the question of whether to jump
into the pool. See New York City Bar Association Prof’l
Ethics Comm., Formal Op. 2019-4, “Representing
Multiple Individuals in the Context of a Government
or Internal Investigation.”
On the issue of how you will handle conflicts that arise in the
future, in general, I am not a fan of advance waivers, as it is impossible
for a client to know what conflict they are waiving until the events
arise. However, in this case, the possible triggers of a conflict are
somewhat predictable and can be specifically enumerated. Thus,
an advance waiver that gives the attorney the right to determine
how to resolve a conflict that arises should be part of the initial
client discussion and should also be included in the engagement
letter. This preserves the ability to keep the pool intact, even if one
client is conflicted out of it. Make sure that the client understands
the advance waiver and exactly what it means: that they will be left
without a lawyer and may need to start from scratch with someone
new.
After your interviews, what if you decide that one prospective
client does not fit into the pool? How do you convey that to company
counsel without betraying a confidence or creating an inference of
culpability? My advice is to be vague: tell company counsel that
the representation is not “a good fit” and that the client would be
better off with a different, or even their own lawyer. If necessary, fall
on the sword to deflect suspicion.
All of this groundwork will be worthless if these risks, your
advice about them, and your client’s understanding of them are not memorialized in an engagement letter. This letter must be
counter-signed by your client as proof that the advice has been
given and understood.
As we all know, there are times when investigations are quiet.
During these times, remain diligent! Calendar reminders to check
in with company counsel on the progress of the investigation. Have
new subpoenas been issued? Have any interviews been conducted?
Is an internal investigation ongoing or complete? In short, is there
anything you should know to ensure that a conflict has not arisen
while you were not watching.
As the saying goes, a stitch in time, saves nine! The work you do up
front in advising your clients and assuring that they understand and
are comfortable with the arrangement will enable to take on this
rewarding and important work of protecting employees embroiled
in a government investigation, and to see it through to the end with
all of them.
Reprinted with permission from the March 2023, Vol.8, Issue 1 of For The Defense. © PACDL 2023. All rights reserved.