ETHICAL ISSUES IN RESPONDING TO GOVERNMENT INVESTIGATIONS
March 19 - 21, 2002
Bethany J. Bridgham,
Associate General Counsel
American University,
Washington, DC
Introduction
Government regulation of post-secondary institutions is increasing every year. This includes
both federal and state action. There is little activity on a college campus which is not subject to some
sort of government oversight, whether regular, routine auditing of on-going activities or a surprise visit
engendered by a perceived risk to health or safety.
The best defense an in-house counsel can offer to any government investigation or inquiry may
well be a well-educated campus community. However, in educating the campus community, the
university counsel must use extreme care not to violate professional ethical responsibilities, whether
based in the common law or the ethical guidelines of the ABA's Model Rules.
There is also a role for a good offense in this situation as the individuals conducting the
investigation are also obligated to follow the applicable ethical, procedural and legal guidelines. Every
attorney is responsible for adhering to the rules of professional responsibility and conduct, which
includes ensuring that opposing counsel is behaving ethically as well. In the high-pressure atmosphere
of a multi-faceted government investigation, which requires counsel to juggle obligations to multiple
campus clients, keeping track of opposing counsel's actions may not be a top priority. However, regular
monitoring by in-house counsel may provide a subtle reminder to government investigators that their
actions are also subject to ethical standards.
During this session, I will focus on the practical aspects of dealing with government
investigations by undertaking the education and counseling of members of your campus community on
the nuts-and-bolts of these investigations, while ensuring that these efforts do not violate applicable
ethical guidelines.
I.
Counseling Employees and Students Involved in Government Investigations
In an ideal world, your opportunity to counsel employees and students on the ins-and-outs of
government investigations will be pro-active rather than reactive. The more education you undertake at
the front end, the better off you will be if and when a government inquiry or investigation is launched.
In matters involving health, safety or environmental issues, government agents often show up
unannounced, demanding immediate access to documents and key employees, without the presence of
counsel. Employees should understand that any government investigation is not a routine matter and
should be taken seriously. However, well-educated employees are more likely to respond in a reasoned
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and rational manner, which will assist you in your efforts to manage, contain and control the
investigation.
A.
What Should Your Employees Know?
Members of the campus community should have a basic fund of knowledge about how
government inquiries are launched, how they will be conducted and what role the employee
might be expected to play in any such investigation. Individuals should be encouraged to call
in-house counsel if they have any questions, doubts or concerns.
1. What Do I Do When a Government Investigator Shows Up Unannounced?
a)
In order to gain an advantage, some government investigators will appear
with little or no warning and seek to interview employees or students.
Once you are aware of a pending or possible government investigation,
you should anticipate the likely pool of individuals that might be involved
in the investigation and contact each of them.
i.
ii.
b)
Model Rule 4.2 prohibits opposing counsel from talking directly to
certain classes of employees. In general, employees who are
managers or supervisors and those whose behavior can convey
liability to the institution are in the protected class. However,
those employees outside the two classes may be accessible by
opposing counsel despite objections by in-house counsel.
a.
Under Model Rule 3.4, counsel may ethically advise
employees to refrain from voluntarily providing
information to a government investigator.
Do not forget to include former employees within the pool.
Former employees will often be contacted by government agents in
the hope that these individuals will be less loyal to the institution.
a.
Although a former employee may not have a current
relationship with the institution, she may have confidential
and privileged information which belongs to the institution
for which counsel can assert a privilege. (See: ABA
Formal Ethics Opinion 91-359)
b.
However, Model Rule 4.2 does not include former
employees and opposing counsel may interview them
without the presence of in-house counsel.
Employees and students should be aware that if the investigator does not
have a subpoena or search warrant:
i.
ii.
iii.
the individual is free to speak with the investigator or to decline to
do so;
if the individual decides to talk with the investigator, the individual
should tell the truth;
although the interview may not appear adverse in nature,
government investigators are not required to advise individuals of
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iv.
c)
their rights. Anything the individual says to the investigator can be
used against them and the institution in any subsequent criminal,
civil or administrative proceeding.
the individual is free to contact in-house counsel (or their own)
before deciding whether to speak with government investigators.
The view from the Feds: In years past, the Department of Justice
(DOJ) took the position that federal agents involved in criminal
investigations could interview any employee without the consent of
in-house counsel, despite the prohibitions of Model Rule 4.2. DOJ
insisted that the phrase “ … unless …authorized by law …” within
Model Rule 4.2, provided a carve out which made the rule
inapplicable to federal prosecutors.
i.
ii.
iii.
Courts were divided on the issue and DOJ
undertook internal regulatory changes to support its
position.
Passage of the Citizens Protection Act (also
known as the McDade Amendment) curtailed DOJ's
activities. (See: 28 U.S.C.A. Sec. 530 B).
McDade Amendment subjects federal prosecutors
to the state ethical rules and laws and those of
the local federal court.
In reviewing these options with employees and students, use the
opportunity to review the institution's indemnification and
representation policy so that the individuals understand whether or not the
institution will represent them, or pay for a counsel of their choosing, in
any subsequent government investigation.
e)
Employees should understand that they may not release documents to
anyone without the express permission of counsel.
2.
d)
What Do I do With a Subpoena?
a) Employees, in general, should not be authorized to accept subpoenas on
behalf of the institution. Acceptance of subpoenas on behalf of the institution
should be reserved to members of the in-house counsel's office.
i. Employees should be instructed to send anyone with a subpoena to the
in-house counsel's office, as well as calling in-house counsel to let her
know that the subpoena is on its way.
b) Employees should be advised that while a subpoena may compel their
appearance before a grand jury or at a deposition at a later date, it does not
give the agent or investigator delivering the subpoena the right to interview or
question them outside of those compelled appearances.
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i.
See: Model Rule 4.2 and/or Rule 4.3, addressing contact with
individuals who are, or are not, represented by counsel.
c) Explain the difference between subpoenas which request the production of
certain documents and those that compel an individual's appearance at a
certain place and time.
i.
3.
If the subpoena is for the production of documents or other
material, employees should know not to release documents
without first contacting counsel.
What Do I Do With A Search Warrant?
a) In general, a search warrant allows a law enforcement officer to search
and seize:
i.
contraband;
ii.
property used in or designed for the commission of a crime;
iii.
property that is evidence of the commission of a crime.
b) A search can be done with force but generally must be conducted during
the daytime, absent permission to the contrary. Search warrants are public
documents and the media may have been notified of the impending search.
Assume the worst and prepare for media coverage.
c) Employees should know that if a government agent shows up with a
search warrant, counsel should be called immediately.
d) Counsel or a designated employee should take the following steps:
i.
ii.
iii.
iv.
v.
vi.
vii.
Ask the government agent for identification and get the names of
the agents involved in the search.
Inspect the warrant and make sure it is valid.
Determine what the limits of the warrant are as to the area to be
searched and the information or documents sought. The search
should be limited to what is specified in the warrant. No one
should consent to the agents searching areas or seizing documents
which are not covered by the warrant.
Monitor and observe the search. Make a list of what is taken and
ask the agents for a receipt for the property.
Employees and counsel should avoid engaging in lengthy
exchanges with the agents as anything that is said can be used
against the institution or the employees at a later date.
Respond to any inquiries in a truthful but concise manner. In
general, search warrants apply only to the search and seizure of
evidence, they do not authorize interviews.
Do not interfere with or impede the search in any way.
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4.
Who is the Client? Or, Will the University Protect Me?
Increasingly, in-house counsel are called upon to fulfill a variety of roles for
the institution. Our role is no longer limited to solely legal advice but expanded to
include every facet of the university's operations. This expanded knowledge can enhance
your ability to deliver legal advice to your client and is in keeping with the Bar's
expectation of the ethical practice of law. (See: Model Rule 2.1: "In representing a
client, a lawyer shall exercise independent professional judgment and render candid
advice. In rendering advice, a lawyer may refer not only to law but other considerations
such as moral, economic, social and political factors that may be relevant to the client's
situation.")
However, increased involvement in non-legal affairs can create the impression
among the campus community that anything discussed at a meeting at which counsel is
present is protected by the attorney-client privilege. Likewise, as the campus community
adapts to having a lawyer "on-call", they will assume that you are "their" attorney for all
purposes. Learning that the institution -- and not necessarily the individual -- is the one
entitled to your services may come as an unexpected surprise, especially if this
conversation takes place for the first time during a crisis.
a)
Educate the campus community: Take every opportunity to address the
campus community on your role for the institution. You should have a
firm grasp of what your role is before you attempt to advise an employee
or student about their rights and potential liabilities.
i. explain your role and that you represent the institution
a.
See: Model Rule 1.13(d), which requires that counsel
disclose his representation of the institution to a third-party.
Counsel must explain the different interests involved, the
advantages of seeking independent legal advice, and the
advantages and disadvantages to the third-party.
ii. explain that you may also represent the employee/student if they
and the institution consent to the dual role and if there is no conflict of
interest in this multiple representation.
a.
(See: Model Rule 1.7)
b.
Where a corporation is the client, in general, it also
includes the “decision-makers” or managers of the
institution. (See: Model Rule 1.13(a) – “a lawyer
employed or retained by an organization represents the
organization acting through its duly authorized
constituents.” and Upjohn v. United States, 449 U.S. 383
(1981))
iii. explain the attorney-client privilege, that it belongs to the institution,
and that the institution is the only one who has the right to waive it.
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iv. Consider documenting this meeting and disclosure in the event there is
a later challenge to the legal advice or representation which you
offered.
b)
Your office website is a good spot for posting a written description of the
in-house counsel's role and/or include it in the employee handbook. This
description should include a clear statement that the counsel represents the
institution.
i. Some commentators have even suggested the adoption of a formal
“conflicts-of-interest” policy posted on such sites to address the everpresent issue of multiple representation.
ii. See Appendix for examples.
B. Advising Students About Their Rights
The academic environment presents a safe harbor for students to assert their
independence while protected from the harsh realities of true independence. This dichotomy
also leaves universities and colleges struggling with the question of when students should be
treated as adults -- with all the rights, responsibilities and liabilities thereof - and when they
should be treated as a minor or dependent, with full parental involvement.
1)
If a government investigation involves a student, in-house counsel should
determine whether or not he is dealing with a legal adult.
a) The age of majority is established by state law. In general, most states
consider 18 to be the age of majority.
i. Some jurisdictions have chosen to confer different rights and
responsibilities with different ages.
a. Example: Consent to medical treatment is 18 -- or even
younger --but anyone under the age of 21 is not able to enter
into a binding contract.
i.
If a student is not a legal adult for purposes of
entering into a binding contract, can the student
make a reasoned judgment as to representation by
counsel ?
b)
See: Model Rule 1.14, Client With Diminished Capacity, which includes
status as a minor.
c)
Use caution in counseling students/student-employees about their rights to
representation, participation in investigations, and consent to joint
representation. The university will be viewed as holding an “unequal”
bargaining position – better resources, a better understanding of issues,
and having more at stake -- and counsel may run afoul of any number of
ethical obligations such as those pertaining to adversity of interests (Model
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Rule 1.13, Comment 7), multiple representation (Model Rule 1.7), dealing
with a client with diminished capacity (Model Rule 1.14) and
communicating with an individual who is not represented by counsel
(Model Rule 4.3).
2)
Regardless of the student's status as a legal adult under state law, is this a matter
in which the parents should be notified by the institution of their child's
involvement?
a)
Private institutions, as opposed to public institutions, may have more
leeway in this area in that the private institution may require, as a matter
of policy, parental involvement in certain matters.
i.
b)
3)
But, can counsel make this disclosure without violating prohibitions
against revealing client confidences? (See: Model Rule 1.6)
Does the matter fall under FERPA (Family Educational Rights and Privacy
Act - 20 U.S.C. 1232g)?
a)
In general, FERPA provides students --and their parents -- certain rights
concerning inspection, review, amendment and disclosure of their
educational records.
i.
ii.
iii.
II.
For example, the dependency of the student may be determined by
whether the student is declared as a dependent on the parents' tax
return and/or whether the parent is paying the cost of attendance at
the university.
Educational records are defined as those maintained by the
institution which are directly related to a student.
In general, these do not include law enforcement records,
medical records, employment records, and limited records
made by instructional personnel.
FERPA permits the release of educational records pursuant to a
judicial order or lawfully issued subpoena so long as the institution
has made a reasonable effort to notify the student, and parents as
applicable, in advance.
a. If the institution intends to comply with the subpoena, this
notice should also include the deadline by which the institution
intends to comply so that if the student intends to file a motion
to quash, she may do so during the appropriate timeframe and
serve a copy of the motion on the institution.
Government Investigations: Agency Interviews with Employees and Students – Know
Thine Enemy
Government regulation of colleges and universities increases every year. With the recent rash of
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corporate scandals and a heightened public awareness toward fraud and other misdeeds, we can
expect even more scrutiny of our institution’s activities.
Most government investigations are undertaken in response to reports of wrong-doing. These
reports may be made by employees, by students, by outside third-parties, such as vendors or
contractors, or even a voluntary report of wrong-doing by the institution itself. Although many
government investigations begin as civil or administrative matters, these matters should be treated as a
potential criminal investigation.
A.
They’re Here – Now What ?
Once an institution learns that a government investigation is imminent or underway, in-house
counsel should contact the government investigator or agent and ask the following questions:
1) What is the nature of the investigation? Is the university, a specific employee or both the
target of the investigation?
a)
The institution is not always the target of the investigation. In some instances, the
government is seeking to obtain or clarify information in its investigation of a
different party. If this is the case, you should request a letter from the investigator
stating that your client is neither a target nor a subject of the investigation before
providing any information or making individuals available for interviews.
i. See Appendix: sample letter from Department of Justice
b)
The institution may not be a target of the investigation but may be involved in
litigation with the parties who are targets. In this instance, cooperating with the
investigation may work in your favor if it will lead to some "free discovery".
c)
Your institution may not be subject to the regulatory authority of the federal
agency involved.
i..
Example: General Accounting Office (GAO) investigates fraud/waste by
federal agencies. If the EPA is undertaking a clean-up on your campus
and GAO initiates an investigation, GAO investigators might be
interested in the institution's perspective on the clean-up activities but
would not have jurisdiction over the institution.
2) What is the scope of the investigation?
a)
In some instances, this can be negotiated. Find out what the investigator is
seeking in the way of documents, questions he wants answered and which
university employees he wishes to interview.
3) Ask that investigators work through the counsel’s office to coordinate interviews and
collect documents or other requested information.
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a)
University policy should dictate that all employees contact counsel’s office
immediately if they receive a subpoena, search warrant or any type of government
request for documents, interviews or information.
b)
See: Appendix for a variety of sample policies.
Some government investigations begin with little or no notice until the day the subpoena arrives
in your office. Upon receipt of the subpoena, counsel should notify all individuals who are likely to be
in possession of relevant documents of the subpoena and pending investigation.
1) This notification should advise these individuals that no documents or
information relating to the investigation should be destroyed, altered or
removed until they are instructed otherwise.
a)
See Model Rule 3.4, Fairness to Opposing Party and Counsel, which speaks to the
destruction or concealment of documents or other material.
2) This is true even if those documents would have otherwise been destroyed
as part of a regular document retention/destruction policy.
a)
b)
B.
Sarbanes – Oxley Act: generally applies only to publicly traded
companies. However, given the public distaste and outcry over the
Enron, Arthur Anderson and similar corporate scandals, tax-exempt and
non-profit organizations should anticipate the likelihood that they will
be held to a similar standard.
i.
Sarbanes-Oxley Act: provides that any alteration or destruction of a
document with the intent to obstruct a federal investigation or bankruptcy
proceeding, is punishable by a fine, imprisonment of up to 20 years, or
both. (Sarbanes –Oxley Sec. 802(a))
ii.
Similarly, a second provision also addresses document destruction with
the intent to impede in an “official proceeding”, which is generally defined
as a proceeding before a judge, US court, Congress or a federal agency (18
U.S.C. Sec. 1515). This is also punishable by a fine and up to 20 years
imprisonment. (Sarbanes-Oxley Act Sec. 1102)
Until in-house counsel has had the opportunity to assess whether multiple
representation is appropriate in this situation, heed the prohibitions of Model Rule
4.3, Dealing With Unrepresented Person. (In part: "The lawyer shall not give
legal advice to an unrepresented person, other than the advice to secure counsel,
if the lawyer knows or reasonably should know that the interests of such a person
are or have the reasonable possibility of being in conflict with the interests of the
client.")
They’re Calling Your Name – Prepping for Agency Interviews
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Prior to any meeting or interview with government investigators, counsel should meet
with the individual to be interviewed. If discussions with the government investigator have
provided information as to the nature of the investigation, counsel should review with the
individual what he or she knows about the topic. Use care when meeting with individuals who
are potential witnesses or interviewees and avoid any hint or attempt at humor which might
suggest that the individual should be anything but truthful and forthcoming in his responses.
Although you may be trying to present the best defense possible for your client, you also wish to
avoid creating any basis for an obstruction of justice charge.
1) Review the Basics
a)
Explain to the individual what you know about the investigation - is the
institution or the employee, both or neither, a specific target? -- without
revealing client confidences. (See: Model Rule 1.6)
i.
ii.
This discussion should include a disclosure as to whether in-house
counsel will represent the individual or not. If not, Model Rule 4.3
may limit what counsel may say.
See Appendix - Example of an "Invitation" to a Congressional
Hearing
b) The individual should be encouraged to tell the truth, to listen to the questions
asked and provide accurate and concise answers to those questions.
Individuals should be cautioned against providing information
unrelated to the question or speculating.
i.
If they do not know the answer, “I don’t know” is a perfectly
acceptable response.
c) If you have provided documents to investigators which are relevant to the
investigation, consider sharing them with the employee to be interviewed so
that she is familiar with the documents and has had an opportunity to review
them before being questioned about their contents or meaning.
2) Develop a list of questions you believe the government is likely to ask and review
the employee's responses.
a)
C.
However, when conducting this exercise avoid any discussions which
might suggest witness tampering or encouraging an individual to make
inaccurate or misleading statements. (See: Victim and Witness Protection
Act (18 U.S.C.A. 1512) and Model Rule 3.4 (In part: "A Lawyer shall not
falsify evidence, counsel or assist a witness to testify falsely …"))
Now That They’re Here – How Do I Get Rid of Them?
Due to the increasing level of government regulation, government investigations can be
initiated by any number of federal, state or local agencies. While the rules, regulations and
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procedures may vary a great deal between them, one thing each will have in common is that an
established set of rules and regulations will guide any ensuing investigation.
When you contact the investigator, to ask about the nature and scope of the investigation,
you should also take the opportunity to ask the investigator what rules and procedures will guide
the investigation and how you can obtain a copy of them. Many agencies, recognizing that such
material is subject to public records laws or the Freedom of Information Act (FOIA) have begun
posting them freely on their websites. If you have a working familiarity with these procedures at
the front end of the investigation, it may well help you avoid costly mistakes during the
investigation.
1.
Sample of websites that post the rules and regulations governing investigations
include:
a)
b)
c)
d)
National Labor Relations Board (NLRB) – Case Handling Manual
http://www.nlrb.gov/manual
Equal Employment Opportunity Commission (EEOC) - Compliance
Manual, http://www.eeoc.gov/policy/compliance
Department of Education – Office of Civil Rights – Case Resolution
Manual - http://www.ed.gov/offices/OCR/docs/ocrcrm.html
Federal Trade Commission (FTC) – Administrative Staff Manual
http://www.ftc.gov/foia/adminstaffmanuals
Although some argue that cooperating fully with government investigators is more likely to yield
a better overall experience, cooperation should not mean that government investigators are allowed to
cut corners, ignore the proper procedures or your role in the process. Do not be intimidated by the
investigation or investigators. Be prepared to challenge any behavior which threatens the rights of your
clients.
1.
For Example: The Public Defender's office was investigating an employment
discrimination complaint on campus. Despite being told numerous times that they
should coordinate their requests for interviews and access to university
employees, who were represented by the institution, through counsel's office, the
lead attorney and her investigator persisted in arriving on campus unannounced
and confronting employees during the work day, demanding interviews and
documents.
a.
b.
c.
A complaint was lodged with the attorney's supervisor, who was
unsympathetic and uncooperative.
Although counsel determined that she did not wish to file a formal
complaint, she wanted the behavior to stop.
Counsel drafted another letter, outlining the situation and her objections.
She sent it not only to the public defender's supervisor but also to the
general counsels of the other universities in the city, assuming if this
behavior was occurring on her campus, it was likely a pattern and practice
repeated throughout the community. In the letter, she encouraged her
colleagues to put the Public Defender's office on notice as to the proper
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d.
III.
procedures for contacting their employees and to take whatever steps
necessary to enforce these procedures.
Shortly thereafter, discussions with the Public Defender's office resulted in
an understanding that was acceptable to the parties involved.
Communicating the Right of Employees and Students to Decline Agency Interviews
Upon receiving notice of a possible or pending government investigation, counsel should take
steps to prepare the involved individuals. Depending upon the type of government investigation, the
individuals may have a right to refuse to participate in the interview process or the institution may feel
that participating in the interview is not in its best interest. Under the Model Rules, however, counsel
may not instruct an individual who is not her client, not to voluntarily talk with another person (See:
Model Rule 3.4(f)).
If, however, the interview is being conducted pursuant to a subpoena or criminal investigation,
counsel should be careful not to suggest that an employee refuse to cooperate with government agents or
take any action that might impede the investigation as such activity could lead to charges of obstructing
justice (see: discussion below) and run afoul of ethics rules (see: Model Rule 1.13), which prohibits
counsel from recommending actions which are adverse to the individuals' interest.
A.
The Government Agent is Not Your Friend
First and foremost, any individual participating in an interview should remember that the
investigation was launched because of an allegation of wrong-doing. While the individual or the
institution may not be a subject or a target, initially, of the investigation, anything the employee says
during a government interview can, and will, be used against him or her (and/or the institution). If the
investigation reveals the grounds for new charges, there is nothing to stop the government agent from
using information gleaned during these initial interviews to later charge the individual or institution with
wrong-doing.
Before an individual participates in any interview, in-house counsel should have had at
least one conversation with the individual pertaining to the university's policy on indemnification and
representation.
B.
I Don’t Wanna, I Don’t Hafta, You Can't Make Me
1.
Your employees should know that they have the following basic rights during a
government investigation or interview:
a)
b)
c)
2.
the employee may refuse to speak with the investigator
if the employee agrees to be interviewed, the employee also has the right
to choose have counsel present or to be interviewed without counsel;
the employee may choose a convenient place and time for the interview,
including during work hours.
When reviewing these rights with your employees, the employee should also be
advised that:
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a)
b)
c)
d)
C.
it is the institution’s policy that any information shared with the
government will be truthful;
it is the institution’s policy to cooperate with government investigations;
anything the employee says during a government interview can, and will,
be used against him or her (and/or the institution) during any subsequent
legal action, whether civil, criminal or administrative; and
participating in the government interview may be a waiver of the
employee’s right against self-incrimination.
Avoiding Charges of Obstructing of Justice
In discussing an employee or student’s right to decline an agency interview, counsel must use
care not to run afoul of obstruction of justice charges or engage in behavior which is prejudicial to the
administration of justice (Model Rule 8.4). This issue is most likely to arise in the areas of witness
interviews and document retention.
1.
The primary federal statute, 18 U.S.C.A. Sec. 1503, has been interpreted broadly
by the courts to cover any “endeavor” which might influence, intimidate, impede,
obstruct the administration of justice by a federal court.
2.
The Obstruction of Proceedings Before Departments, Agencies and Committees
Statute parallels the primary federal statute but includes federal agency
proceedings and Congressional investigations. (18 U.S.C.A. Sec. 1505)
3.
The third federal statute which applies in this area is the Victim and Witness
Protection Act (18 U.S.C.A. 1512) prohibits the intimidation or influence of
anyone giving testimony in an official proceeding. This would include
withholding testimony, preventing someone from sharing information with a law
enforcement officer or making misleading statements.
IV. Refusing Permission for Agency Interviews
In-house counsel may ethically advise employees, including those who are not members of the
“control group” to refrain from talking to opposing counsel in matters involving civil litigation.
However, counsel must tread lightly to ensure that he will not be charged with obstruction of justice or
otherwise impeding the judicial process.
Although counsel may inform the individuals of their right to decide whether or not to speak
with the investigating agents, counsel should be careful not to imply or recommend that the employee
refuse to cooperate. However, an employee who has been educated about his or her rights to decline or
participate in agency interviews is less likely to feel intimidated or threatened by a government agent
who is requesting an interview. Counsel's actions will also be governed by Model Rule 3.4, which
states: " … a lawyer shall not … request a person other than a client from voluntarily giving relevant
information to another party unless (1) the person is a relative or an employee or another agent of a
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client; and (2) the lawyer reasonably believes that the person’s interests will not be adversely affected by
refraining from giving such information."
As mentioned earlier, the rules are also different when advising individuals who are former
employees of the institution who may be represented by their own counsel (Model Rule 4.2) or are not
represented at all (Model Rule 4.3).
V.
Communicating and Implementing College Policies on Representation and
Indemnification
Indemnification policies are rarely all-inclusive, covering all acts or liabilities no matter what the
circumstances. In general, most schools have adopted a policy of providing indemnification for
actions that are within an employee's scope of employment. Some limited exceptions may also be
made where a joint defense/representation is in the university's best interest.
The importance of a clear and well-developed indemnification and representation policy, which
can anticipate the complexities of practicing law in-house for a large institution, cannot be
understated. The in-house counsel, more often than not, is likely to find herself regularly faced with
the task of multiple representation, with clients with divergent interests and/or representation of
individuals who may or may not have acted within the scope of their employment. Unlike our
colleagues in private practice, we rarely get to choose our clients and often times find ourselves
defending individuals whose actions we find objectionable.
One of my personal learning experiences in this area involved the adjudication of a sexual
harassment claim by a student against a professor. The student lodged a complaint with the
University, prompting an internal investigation, closely followed by the filing of a lawsuit, naming
both the professor and the University. The University’s investigation found enough evidence to
forward the case to a faculty hearing committee for further review.
The hearing committee determined there was a basis for a hearing but first requested that the
university retain and pay for an attorney for the committee. In addition, the university was faced
with the prospect of prosecuting the professor for misconduct in the internal proceedings while
defending his activities in a court of law.
In-house counsel represented the university during the internal investigation and at trial. The
university paid for the attorney for the hearing committee but was not privy to or entitled to any
disclosure as to the communications between those parties.
The university ultimately did discipline the faculty member but provided joint representation at
trial against the student.
A.
Developing An Indemnification Policy
When developing an indemnification policy for your institution's use, consider the
following issues:
1)
what defines acting within the scope of employment?
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2)
3)
4)
5)
how will you handle multiple representation?
what happens if a conflict arises pertaining to the case?
what happens if a conflict arises unrelated to the case?
are employees entitled to separate counsel if requested?
1.
"Acting Within the Scope of Employment"
Most questions appear to arise when defining the phrase “acting within the scope of
employment”. Individuals are resistant to the idea of an outside third-party determining when
they are or are not acting within the scope of their duties and concerned when that determination
will dictate whether or not they are entitled to university provided representation. However, this
issue may be the most critical piece to any policy addressing the issue of when indemnification
and the right to representation attach.
In general, an employee who is fulfilling the duties and responsibilities assigned to him
as part of his employment by the institution will be considered to be acting within the scope of
his employment. Unfortunately, situations are rarely so clear cut. Hindsight and the passage of
time may provide a strong basis for viewing actions as illegal and clearly outside the scope of
employment. However, each case should be viewed independently, with a facts and
circumstances approach. Incremental decision-making may have obscured the growing problem
and it is only when viewed in totality that the employee's actions seem illegal or inappropriate.
2.
Multiple Representation
Rule 1.13 of the Model Rules of Professional Conduct provides that an attorney may
simultaneously represent an organization and any of its officers or employees as long as there is
no conflict in the representation. Where an employee has been acting within the scope of his or
her employment, and those activities are the subject of the government investigation, it is likely
that the parties would consent to multiple representation since their interests were similar.
However, conflicts do arise in multiple representation situations, which can involve
conflicts related to the case and those unrelated to the case.
a.
Conflicts Related to the Case
If the faculty member in the scenario described above were to provide confidential
information to in-house counsel which suggests that the faculty member was acting outside the
scope of his employment, counsel should determine what obligations counsel has toward both
the staff member and the institution. If counsel shares this information with the institution, it
would be against the interest of the staff member and present a conflict of interest. (See: Rule
1.7) Counsel may need to withdraw from representation of all parties to avoid such a conflict
and to maintain the confidences of a client. (See: Model Rule 1.6)
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b.
Conflicts Unrelated to the Case
Conflict of interest issues can also arise in multiple representation cases where a conflict
arises which is unrelated to the matter at hand. Going back to our scenario, imagine that during
the trial related to the sexual harassment charge, it is discovered that the faculty member has
embezzled funds from the institution. In-house counsel has been providing joint representation
to the university and the faculty member in the sexual harassment matter since the beginning.
The discovery of the embezzlement launches an internal investigation and the university
terminates the faculty member for the embezzlement which is otherwise unrelated to the facts
surrounding the sexual harassment allegations.
If the faculty member disputes the charges and sues the university for wrongful
termination, the Model Rule on conflicts of interest (See: Model Rule 1.7) will prevent counsel
from representing the university in both actions. However, if counsel is not asked to represent
the university in the new matter he may continue to provide joint representation for the sexual
harassment case. Counsel will need to ensure that both parties consent to the continued joint
representation and counsel has determined that the parties’ interest in the matter do not differ. If
the parties do not consent, it is likely that counsel will have to withdraw from representing one or
both parties.
3)
Is the Employee Entitled to Independent Counsel Paid for by
the Institution?
In drafting and implementing your indemnification and representation policy, you should
also consider when individual employees will be entitled to separate counsel, paid for by the
institution. The mere fact that the institution is paying those legal fees, does not, however, entitle
the institution to receive or act upon confidential information exchanged between the
employee/client and counsel.
In the scenario described above, if counsel was representing only the faculty member,
who then shared confidential information indicating he had either acted outside the scope of his
employment or committed a criminal act, even though the institution is paying the counsel’s
salary or legal fees, counsel is required (absent permission from his client) to keep information
disclosed by the faculty member confidential.
B.
Communicating the Policy to the Campus Community
The policy on indemnification and representation should be issued annually. Our
practice is to distribute the policy to the "three D’s list" - deans, directors and department
heads. Our office follows-ups with an invitation to have a member of the counsel's office
attend the department's next staff meeting to answer any questions or concerns. (A copy of
our policy is included in the Appendix.)
Another good avenue to distribute the policy is the employee handbook. Every employee
should receive a handbook as part of the new employee orientation. Upon receipt of the
handbook, the employee should sign an acknowledgement that he has received the handbook
and understands that he is responsible for familiarizing himself with its contents.
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Posting the policy on your office website will also allow for quick and ready reference
for any individual with questions or seeking clarification.
Conclusion
As federal and state agencies increase their scrutiny of non-profit and tax-exempt organizations,
colleges and universities will find themselves subject to an increasing amount of governmental inquiry
and investigation. An institution’s response in the early stages of an inquiry can have a significant
impact on the outcome. If an institution is able to respond in an orderly, truthful and thorough manner,
which accurately conveys the information the government is seeking, this response may well bring the
investigation to an early conclusion with fewer, if any, penalties or fines.
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Resources
Books
Kaplin, William A. and Barbara A. Lee. The Law of Higher
Education: A Comprehensive Guide to Legal Implications of
Administrative Decision Making (3rd Edition). Jossey-Bass Publishers,
May 1995
NACUA Outlines
Connell, Mary Ann. Ethical Issues for the College/University
Lawyer. National Association of College and University Attorneys
(NACUA), June1996.
Schmidt, Judith Yost and Brian A. Snow. Facing the Demons:
Special Problems of Counsel In Higher Education, Multiple
Representation and Investigations. National Association of College and
University Attorneys (NACUA), June 1995.
Additional Sources
Franze, Laura M. and Roland M. Juarez, Sarbanes-Oxley. Implications for
General Counsel, Human Resources, Employment Policy and Employment Law –
A Review of Whistle-Blower Law and Employment Record Retention
Requirement. September 2002.
Fucile, Mark J., Peter R. Jarvis and Michael Roster. Timing is
Everything: When Document Retention Policies and Related In-house
Counsel Advice Intersect with Government Investigations and Litigation.
American Corporate Counsel Association (ACCA) Docket, May 2002.
Gregg, Bobbie McGee and Andrea I. Zopp. Surviving
Investigations and Raids. American Corporate Counsel Association
(ACCA) Annual Meeting, 2002.
Hoffinger, Adam S. and Piper Rudnick. Building Trust and
Preserving Rights During Government Investigation. Piper Rudnick LLP
(Publication ID: 94115192001), March 2000 (revised).
Lidge III, Ernest F. Government Civil Investigations and the
Ethical Ban on Communicating with Represented Parties. 67 Ind. L. J. 549
(1992).
National Association of College and University Attorneys
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MacKay, Scott W. A Primer for Lockheed-Martin Corporation Inhouse Counsel: Handling Government and Internal Investigations.
Corporate Counsel Institute, March 2002.
Molo, Stephen F., (Corporate Counselor). A Knock at the Door:
Strategies to Minimize Risks When Employees are Contacted. March
2000.
Olson, Scott L, The Potential Liabilities Faced by In-house
Counsel. 7 University of Miami Business Law Review 1 (1998)
Reid, Ikechi N. S., Arnold Morse and Ivy R. Martin. Responding
to Government Investigations InfoPak. American Corporate Counsel
Association (ACCA), August 2002.
Villa, John K. Can the Feds Interview Corporate Employees
Without Your Counsel’s Consent? American Corporate Counsel
Association (ACCA) Docket, March 2002.
Villa, John K. What Can You Tell Your Employees When the Feds
Arrive to Question Them?. American Corporate Counsel Association
(ACCA) Docket, January 2002.
White, Wendy S. How to Effectively Manage College or
University Legal Affairs: A Protocol for Avoiding Litigation, Effectively
Managing Unavoidable Litigation, Maintaining Ethical Standards in the
Litigation Context. Stetson University College of Law: Law and Higher
Education, 1997.
National Association of College and University Attorneys
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Appendix
Legal Services
p. 6
Sec. I, A, (4) (b) (ii)
Creighton University
University of Central Florida
University of Kansas
University of Michigan
University of Pittsburgh
Department of Justice letter
p. 8
Sec. II, A, (1) (a) (i)
University Policies for Government Investigations
p. 8
Sec. II, A, (3) (b)
George Washington University
North Carolina State University
University of Tulsa
Congressional Invitation
p. 10
Sec. II, B, (1) (a) (ii)
Indemnification and Defense of University Personnel
p. 16
Sec. V, B
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