March 19, 2019

Whistleblower Bounties: Is it Ethical for Lawyers to Seek Them?

Thursday, June 2

(2:00 - 3:20pm)

Moderator: Nancy Moore
Panelists: Daniel Anderson, Kathleen Clark, Jordan Thomas

The federal government increasingly relies on whistleblowers to uncover fraud, including making substantial awards under the False Claims Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act. Courts have prevented several lawyer-whistleblowers from serving as FCA whistleblowers on ethical grounds, but these courts maintain that lawyers may seek and collect these awards under some circumstances. The SEC’s Dodd-Frank regulations expressly permit lawyers to seek whistleblower bounties if they are permitted to do so under either state confidentiality rules or the SEC’s own SOX regulations, but the Dodd-Frank regulations fail to address a lawyer’s duties of loyalty, including conflicts of interest. Further, because Dodd-Frank whistleblowers can remain anonymous, we don’t know whether any lawyers have sought or received an award, and a company may never have the opportunity to argue that the lawyer’s conduct was unethical. This panel will address the wide range of ethical issues that arise when a lawyer contemplates seeking a financial reward for blowing the whistle on a current or former client. These issues include not only duties of confidentiality and loyalty (including an agent’s fiduciary duty not to profit from information gained from the agency relationship), but also federal preemption of state ethics law and difficult choice of law issues in determining which state’s ethics rules apply.


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