By Carrie S. Bryant
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By Carrie S. Bryant
We all know the general rule of client representation as in-house counsel: the attorney represents the organization, and not the shareholders, officers or employees. But what happens when the plaintiff is a former employee, and not only names the company as the defendant, but sues his former supervisor as well, thereby making the supervisor a co-defendant? How does this happen? Is the general rule followed or broken? What are the practical considerations of dual representation?
How It Happens
There may be multiple reasons why a supervisor is sued by his former employee. You may find that the supervisor is sued as a revenge tactic. Maybe the employee had a particularly contentious relationship with the supervisor, which may happen in the case of an employment termination. On the other hand, the individual may believe that the supervisor is personally responsible for his adverse treatment, such as in a harassment case. Sometimes the supervisor is sued because the employee wants to increase his options for recovering damages. No matter the reason, once the suit is filed, in-house counsel must make the decision whether to represent the supervisor or to allow the supervisor to be represented by another attorney.
The General Rule Has Its Exceptions, or Does It
The Model Rules of Professional Conduct provide a framework for the ethical practice of law, and state that "A lawyer employed or retained by an organization represents the organization acting through its duly authorized constituents." 1 However, in-house counsel can maintain the dual representation of the corporation and the supervisor, in certain circumstances, even where a concurrent conflict may exist. 2 In general, the in-house attorney needs to reasonably believe that the representation of the corporation or the supervisor will not be adversely affected. In order to form this belief, the attorney will need to meet with the supervisor to ascertain the facts of the case and find out the details of his story. The attorney should also meet with other witnesses and potential witnesses to discuss their versions of the facts. In addition, the in-house attorney needs to get the clients' consent after explaining the implications of the common representation and the risks involved. The MRPC indicates that consent must be in writing.
Should I or Shouldn't I
Once the in-house attorney has made the determination that the dual representation can be maintained, it does not automatically mean that it should be maintained. If the in-house attorney meets with the supervisor and finds that he did the right things in the right way, and that the legal dispute merely involves differing opinions between the supervisor and former employee, then the question of dual representation becomes a lot easier. Furthermore, there might be some advantages to having one attorney represent both the corporation and the supervisor. For instance, the dual representation may result in efficiencies, and eliminate certain redundancies and expenses caused by having two attorneys involved in the legal process. In addition, the in-house attorney is far more likely to get meaningful cooperation from the supervisor if the supervisor believes the in-house attorney is representing his interests. On the other hand, there may be reasons that the corporation may not want the in-house attorney to represent the supervisor. For instance, if the attorney finds that the supervisor did in fact act in bad faith or just plain screwed up, the attorney then needs to figure out what to do next.
In-house attorneys are obligated to protect the interests of the corporation. The discovery of bad faith acts on the part of the supervisor would likely lead to a decision to allow the supervisor to obtain his own counsel. It may additionally prompt a swift settlement of the matter on behalf of the corporation, or mean litigating the matter, but asserting a defense that is adverse to the supervisor. No matter the decision, the in-house attorney must do what is in the best interest of the company, at all times.
Tips on How to Survive the Dual Representation Dilemma
Even though joint representation is allowed, it does not mean that the corporation's interests are somehow trumped by the supervisor with whom in-house counsel will be directly dealing. Therefore, it is important that the in-house attorney clearly explain his role as representing the best interests of the corporation, and not any individual. At the same time, discussing the limitations of in-house counsel's representation should be done with a certain amount of finesse so as not to curb the supervisor's level of cooperation and candidness during the legal process. Since the supervisor's actions may bind the corporation, it will be essential to the representation of the corporate client to know the full involvement of the supervisor, and the extent of his actions and inaction.
At the outset, the in-house attorney must inform the supervisor that the representation may end at any time, if it is determined, in the opinion of the corporation, that the supervisor's interests and the corporation's interests are sufficiently divergent to warrant such separate representation. The supervisor should also be informed that, if this occurs, he will have to secure his own legal representation. 3
If a supervisor has acted in bad-faith, the decision will have to be made whether a termination is appropriate or some lesser form of discipline. 4 In either case, it may be a good opportunity to offer re-training to all of the company's leaders regarding the concept of the corporation's interests versus their personal interests, as some supervisors may not truly appreciate how their actions could bind the company or negatively impact the company overall. Training is essential to staving off at least some lawsuits against supervisors.
Brush up on the rules. A review of the MRPC and your state's professional ethics rules would be helpful. The rules provide practical advice on dealing with issues of dual representation, confidentiality and reporting violations of legal obligations to the corporation or violations of the law.
1 MRPC 1.13(a)
2 MRCP 1.7(b)
3 Whether to indemnify may depend on many factors including whether there is an agreement in place to do so, or an obligation under your state's law.
4 Attorneys working for publicly traded companies have a myriad of responsibilities under the Sarbanes-Oxley Act of 2002. A detailed discussion of this Act is beyond the scope of this article.
About the Author
Carrie S. Bryant (J.D., Wayne State University Law School; B.A., University of Michigan) is an Assistant General Counsel in the Employee Relations Law department of Blue Cross Blue Shield of Michigan's Office of the General Counsel in Detroit, Michigan. She may be reached at firstname.lastname@example.org.