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.


Materials

  1. Thomas_Green_Corporate Counsel_June2012
  2. Thomas_SEC Whistle Blower Handbook 2016
  3. Thomas_SEC Interpretation of the SEC Whistleblower Rules Under Section 21f of the Securities Exchange Act of 1934
  4. Clark-Moore BC Law Rev
  5. Pacella Conflicted Counselors March 2016
  6. Pacella-Advocate or Adversary When Attorneys Act as Whistleblowers-GEO J LEGAL ETHICS 
  7. NYCLA Comm on Prof Ethics-F Op 746-Ls as Ws under D-F-2013-10-07
  8. Bury v Community Hospitals of Central California-CtAppCA-2002
  9. NY ex rel Danon v Vanguard-NYSCt-2015-11-13
  10. U.S. EX REL. DOE v. X CORP. _ Leagle
  11. US ex rel FairLaboratoryPracticesAssociates v Quest Diagnostics-2nd-2013
  12. US ex rel Holmes v Northrop Grumman-SD MS-2015-06-03 DQg L-relator-FASTCASE
  13. US ex rel Rodney Repko v Guthrie Clinic
  14. Vermont Agency of Natural Resources v. United States ex rel. Stevens __ 529 U.S. 765 (2000)