Skip to main content

They were in the C suites and the boardrooms, and they were complicit in the control frauds in the FIRE sector, the MERS racketeering, accounting fraud, tax fraud, foreclosure fraud, securities fraud and more.

Everyone knows this, though it can not be easily proven because the evidence is shielded by attorney-client privilege. But if I am not mistaken there are exceptions to the privilege. Advising a client how to commit fraud makes the lawyer a co-conspirator and an accessory to a criminal offense. Such advice is not privileged.

If a client tells you she intends to commit a burglary and asks you the best way to do so, advising her to wear multiple pairs of surgical gloves when breaking in, or to melt down gold jewelry before fencing it, is not a privileged communication. In fact, you have an obligation, if the client can't be persuaded to renounce the intention to commit the crime, to report the client's communication to the appropriate authorities. It's not a privileged communication.

There is a related question. Where was bar counsel? The legal profession is supposed to be self-regulating for the most part. But the malfeasance of the lawyers who advised corporations which frequently and flagrantly violated laws and regulations has not, to my knowledge, been addressed by those responsible. The dereliction of duty of bar counsel is shameful.

When prosecution of a big bank like Wells Fargo, for blatantly disregarding banking laws in laundering billions of dollars of drug money, is deferred upon payment of fines and forfeitures amounting to a miniscule fraction of their annual profits, why aren't in-house and outside counsel to that bank hauled before the legal disciplinary authorities? Surely they should be asked to explain whether they sanctioned the illegal activities or turned a blind eye. Either way it is a violation of legal ethics and calls into question whether they should continue to be allowed to practice law.

When a big bank like Bank of America has to compensate investors for billions of dollars of losses on MBS because of the bank's failure to disclose material information, should the general counsel not have to explain to the disciplinary committee of the relevant bar association how such an egregious breach of fiduciary duty and well-established regulations could have happened? And should the general counsel not be sanctioned if the explanation is found wanting?

When a big bank, like all the TBTF institutions, repeatedly signs consent orders covering the same illegal conduct, each time promising not to do it again, how is it that the legal advisors who signed off on the consent order but repeatedly failed to implement agreed changes do not have to defend their failures, and their licenses, before their peers?

I could cite many examples of corporate misbehavior which has led to companies being fined many millions of dollars or to paying huge settlements for conduct which amounts to a pattern and practice of intentional law breaking. But I know of no instance where corporate counsel, in-house or outside, has faced disciplinary proceedings in connection with the flagrant and persistent illegal activity of their client.

So those are my questions. Where were the lawyers? And where are the lawyers who are supposed to enforce ethical and professional standards and the Code of Professional Responsibility?

Fri May 04, 2012 at 10:08 PM PT: I was mistaken about lawyers generally having a duty to report the criminal intentions of clients to the authorities. I consulted an expert. Mr John Steele, attorney and co-founder of the Legal Ethics Blog, graciously took the time to comment on the post and he indicates that it would rarely be the case that a lawyer would have such a duty. His comment can be found at:

I don't think my error undermines the main thesis of the diary, which is that corporate counsel seem to be immune from scrutiny by the disciplinary authorities. And Mr Steele does note that many people think the state bar associations have just enough resources to pursue easy-to-prove cases, but that "proving up the role of lawyers in something as complex as the mortgage-backed-securities scandals isn't easy to do."

Originally posted to paulbkk on Tue May 01, 2012 at 09:15 AM PDT.

Also republished by Community Spotlight.

Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags


More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site