who represents ceo in capacity as a director attorney ethics

Can a corporation's attorney represent a shareholder or director against the corporation?

A corporation's attorney is not permitted, either during or after that engagement, to represent any shareholder or director against the corporation (or the other shareholders when that would entail acting contrary to his prior representation of the interests of all the shareholders).

Can a lawyer be a member of the Board of directors?

The Lawyer as Director of a Client (American Bar Association) A lawyer for a corporation or other organization who is also a member of its board of directors should determine whether the responsibilities of the two roles may conflict. The lawyer may be called on to advise the corporation in matters involving actions of the directors.

When is a lawyer a lawyer for the organization and not its constituents?

Under Rule 1.13 (a), when a lawyer for an entity is dealing with the organization’s constituents and the lawyer perceives differences between the interests of the organization and the interests of its constituents, the lawyer must “explain that the lawyer is the lawyer for the organization and not for any of the constituents.”

What are the issues for an attorney/ director to consider?

Here are a list of issues for an attorney/director to consider in such scenario: Role Confusion . When you offer a particular opinion to the executive or to other board members, are you communicating as a director or as a lawyer?

Who Should GC report to?

the CEOA general counsel, sometimes called GC, chief legal officer, or corporate counsel, is a company's main attorney and primary source of legal advice... The GC typically reports directly to the CEO, because his or her opinions are integral to business decisions.

What are the ethical responsibilities of an attorney who is hired by a business?

These principles include the lawyer's obligation zealously to protect and pursue a client's legitimate interests, within the bounds of the law, while maintaining a professional, courteous and civil attitude toward all persons involved in the legal system.

What is the difference between chief legal officer and general counsel?

The role of chief legal officer is a newer position than the general counsel and in some ways is an expansion of the general counsel role. The CLO is a C-Suite position that focuses on the legal department but is also responsible for providing valid business solutions to arising problems.

Can general counsel become CEO?

Another general counsel is rising up from the legal department to take over as CEO of a major company. This time it's BWH Hotel Group legal chief, senior vice president and corporate secretary Larry Cuculic, who on Dec. 1 will ascend to his new role as president and CEO of the Phoenix-based global hospitality company.

What are the four responsibilities of lawyers?

It describes the sources and broad definitions of lawyers' four responsibilities: duties to clients and stakeholders; duties to the legal system; duties to one's own institution; and duties to the broader society.

What are ethical rules for lawyers?

Areas covered by ethical standards include: Independence, honesty and integrity. The lawyer and client relationship, in particular, the duties owed by the lawyer to his or her client. This includes matters such as client care, conflict of interest, confidentiality, dealing with client money, and fees.

Is general counsel considered C suite?

The roles of general counsel (GC), chief legal officer (CLO), and corporate counsel (CC) have been growing in importance as C-suite leadership teams become more aware of the elevated risk conditions they are working in as well as the long-term cost of those risks.

Is senior counsel the same as general counsel?

While law departments don't all follow the same pattern, you typically see title along the lines of: Corporate counsel (senior associate/junior partner) Senior counsel (10+ years out, but not in a specific leadership role) Associate general counsel (the equivalent of a senior partner or team or practice group leader) ...

Should compliance officer report to general counsel?

The 2021 HCCA Compliance Institute included a session titled “The Roles of the Compliance Officer and the General Counsel,” during which a speaker from the OIG stated that it is not advisable for compliance functions to be subordinate to the general counsel.

Can lawyers become CEOs?

In this sample about 9 percent of CEOs have law degrees. This non-trivial number of lawyers in top executive positions that are customarily held by individuals with business degrees suggests that legal training has value in the executive labor market.

Why should GC report to CEO?

A direct reporting line between the chief legal officer and chief executive officer is important to corporate culture as a reflection of the “tone at the top,” and through which the CEO sends a powerful message that business decisions are made with appropriate consideration of the ethical, legal, and reputational ...

Do law firms have CEOs?

The large law firm operates with the Managing Partner (or law firm CEO) at the top—the King. This is the person who is the face of the Kingdom and who is held out as being in charge. Beneath the managing partner are nobles, who are the other partners and have “land” (i.e., own a percentage of the firm).

Why do malpractice carriers require information about the lawyer's activities as a corporate director?

Because malpractice carriers are concerned about the personal liability insureds might incur as a result of board service, some applications and renewals for professional liability insurance require information about the lawyer's activities as a corporate director.

What is the general rule in construing contracts between attorneys and clients concerning compensation?

As stated by one court in typical language: "'The general rule is that in construing contracts between attorneys and clients concerning compensation if there is any ambiguity as to the intent of the parties that construction should be adopted which is most favorable to the client.'".

What are the areas of concern for lawyers?

Lawyers should be alert to three key areas of concern: 1) Unintended lawyer-client relationships. An organization might recognize that a director with the background and knowledge of an experienced lawyer could improve the board's deliberations.

Who is Robert Kehr?

Robert L. Kehr is a principal in Kehr, Schiff & Crane, LLP, in Los Angeles. He was a member of the Commission for the Revision of the Rules of Professional Conduct, a former Chair of the State Bar Standing Committee on Professional Responsibility and Conduct and of the Los Angeles County Bar Association’s Professional Responsibility and Ethics Committee. He is an adjunct professor at Loyal Law School. The opinions expressed are his own.

What is the ABA model rule of professional conduct?

For lawyers in this position, they need to know ABA Model Rule of Professional Conduct 1.14, which addresses client-lawyer relationships where the client suffers from a mental illness or diminished capacity. Rule 1.14, a version of which has been adopted in all 50 states and the District of Columbia, states, “the lawyer shall, as far as reasonably possible, maintain a normal client-lawyer relationship with the client.”

What should an attorney consider when determining if a client has a mental illness?

Once an attorney determines whether a client has a mental illness and takes the proper legal precautions, the attorney should also consider his or her behavior toward the client as the representation continues. For any client, effective representation goes far beyond the bare minimum legal and ethical requirements.

What happens if a client cannot act in his or her own interest?

If the client cannot act in his or her own interest, then an attorney “may take reasonably necessary protective action, including consulting with individuals or entities that have the ability to take action to protect the client and, in appropriate cases, seeking the appointment of guardian ad litem, conservator or guardian.”

Can a lawyer be a guardian?

The ethics rules adopted in most states provide that a lawyer may seek a guardian for a client under a disability, “or take other protective action with respect to a client, only when the lawyer reasonably believes that the client cannot adequately act in the client’s own interest.”. Model Rule 1.14 (b).

Do attorneys have to be aware of mental health?

Attorneys should be aware of mental health symptoms to spot a mental illness when representation commences. This, again, may be easier said than done. After all, most attorneys are not trained in mental health assessment. And the younger or less experienced the attorney, the more difficult it can be for the attorney to determine if their client is suffering from a mental illness that affects their capacity to such a degree that the client is unable to understand the lawyer’s advice or make informed decisions.

Who should be the lawyer for a corporation?

A lawyer for a corporation or other organization who is also a member of its board of directors should determine whether the responsibilities of the two roles may conflict. The lawyer may be called on to advise the corporation in matters involving actions of the directors.

What is a director entitled to?

In performing the duties of a director, a director may be entitled to rely on information, opinions, reports or statements prepared or presented by an attorney. This may serve as a defense to a claim if, for example, a director took an action that would otherwise have been considered negligent but not for the director’s reliance on the opinion ...

What is vicarious liability?

In performing the duties of a director, an individual serves in her or his individual capacity and owes a duty of loyalty to act in the best interests of the organization. If a director is serving in such capacity as an agent and at the direction of her or his employer, the employer may be subject to vicarious liability ...

Why are attorneys important to nonprofits?

Attorneys may be of great value to nonprofits when serving on nonprofit boards. They bring to the board a special set of knowledge, skills, perspectives, networks, and experiences, including an ability to spot and address particular issues and problems.

What is the standard of care of a director?

Standard of Care. A director’s standard of care is generally expressed as that of an ordinarily prudent person in a like position under similar circumstances. While there are cases of inside directors (who are employees) of for-profit corporations having a higher standard of care than outside directors, there does not appear to be authority that extends to directors of nonprofit corporations with specific professional knowledge, skills, and experience that might be relevant in exercising their fiduciary duties. Accordingly, directors who happen to be lawyers should not be held to a higher standard of care than other directors. But there have proposals (including in a 2004 Discussion Draft Proposal from the Staff of the Senate Finance Committee) that would require directors with special skills or expertise to use such skills or expertise in meeting their duty of care. And it’s plausible that a director also acting as an attorney to the organization on a particular matter may be held to a higher standard of care based on being comparable to an inside director.

Is attorney client communication protected?

If it’s clear that the communications are to be attorney-client communications, they should be protected by the privilege. However, such protection may be lost if it’s not clear that you are communicating only as a lawyer or if the communication is recorded in minutes to which other persons have access. Competence.

Can a director be received without legal advice?

The concern is two fold: (1) your words offered as a director may be received with unwarranted and unspoken deference if the rest of the board considers it legal advice, and (2) your legal advice offered as a lawyer may be received without appropriate consideration if the rest of the board considers it the thoughts of a director.

What is the right of a corporate director in California?

Under California law, corporate directors also have an "absolute right" to inspect and copy all corporate "books, records and documents of every kind.". This "absolute right" normally extends to documents otherwise subject to the attorney client privilege. In Tritek Telecom v.

What happens if the management and the corporation are represented by different lawyers?

Even if the corporation and the management are represented by different lawyers, the management still control the corporation and hire, pay and direct the activities of the corporation's lawyer.

What is shareholder derivative suit?

The usual situation in a shareholder derivative suit is that the shareholder is bringing a claim against those in control of the corporation (officers, directors and/or controlling shareholders) for damage done to the corporation through a breach of their fiduciary duties, such as looting the corporation's assets through excessive compensation.

Why did the corporation breach the contract?

The reason that the corporation breached the contract was that the controlling shareholder caused the corporation to do so as part of a campaign of oppression, but because the party to the contract is the corporation and not the controlling shareholder, the claim must be brought only against the corporation.

What is the conflict rule?

Most courts have applied the conflict rule only in cases involving allegations of serious misconduct by the individual defendants. The Third Circuit held that where the claims against the individuals were merely negligence or mismanagement, that is breaches of the duty of care rather than the duty of loyalty, then disqualification was not required. Also courts do not apply the rule in derivative cases that are "patently frivolous."

When a shareholder brings an action on behalf of the corporation, is it well established in Texas?

When a shareholder brings an derivative action on behalf of the corporation, it is well-established in Texas that the corporation is not only a proper party to a derivative claim, but is an indispensable party to a shareholder's lawsuit.

What is the court decision based on?

The court reached its decision based upon both the conflict of interest between the corporation and its directors, and the possibility that confidences obtained from one client during the course of representation might be used to the detriment of the other. Many other courts have reached the same result.

What happens when a minority shareholder takes action against a closely held corporation?

Typically, when a minority or otherwise non-controlling shareholder seeks to take action against a closely-held corporation and its management, counsel for the minority will have had no prior relationship with the corporation. Under those circumstances, there can be no question of counsel's obligations to a former client interfering with representation. Indeed, had counsel for the objecting shareholder been counsel for the corporation as a whole during the period in which the acts in issue took place, it is likely that the bar on representation would be absolute under current DR 4-104 (and Proposed Rule 1.9), which bars the disclosure of confidences of other and former clients. Courts have not hesitated to enter orders of disqualification in those rare instances where corporate counsel appeared for a minority shareholder in a management dispute. See, e.g., Wood v. Beacon Factors Corp., 137 App.Div.2d 752, 753, 524 N.Y.S.2d 831,832 (2d Dep't 1988) (Corporate counsel disqualified from representing minority shareholder in action by majority shareholders to enforce corporate loan guaranteed by minority shareholder).

What is attorney-client relationship?

An attorney-client relationship may be implied from the circumstances when a person seeks advice within the attorney's professional competence, and the attorney expressly or impliedly agrees to give or actually gives the desired advice or assistance. DeVaux v. Arter, 416 Mass. 377, 381, 622 N.E.2d 604, 607 (1993). Whether an attorney-client relationship exists is a question of fact. Page v. Frazier, 388 Mass. 55, 61, 445 N.E.2d 148, 152 (1983).

What does it mean to decline professional employment?

A lawyer shall decline professional employment if the exercise of his independent judgment in behalf of a client will be or is likely to be adversely affected by the acceptance of the proffered employment, or if it would be likely to involve him in representing different interests . . .

What is the conflict of interest rule?

Conflict of interest rules are classified under Canon 5 of the Disciplinary Rules ("A lawyer should exercise independent professional judgment on behalf of a client"). Traditionally, corporations have been viewed as "entities" separate and apart from their stockholders, officers and directors.

What are the conflicts of interest rules in Massachusetts?

Conflict of interest rules are classified under Canon 5 of the Disciplinary Rules ("A lawyer should exercise independent professional judgment on behalf of a client").

What is Rule 3:07?

p. 2). Proposed Rule 1.13 (substantively identical to the ABA Model Rule) goes beyond the existing provisions of Rule 3:07 by acknowledging that the representation of an "organization as client" poses ethical issues. Nonetheless, while paragraphs (d) and (e) of proposed Rule 1.13 recognizes the possible conflicts which may exist, it fails to offer any "bright line" test to guide the attorney's conduct:

Is an attorney for a partnership a fiduciary duty?

Just as an attorney for a partnership owes a fiduciary duty to each partner, it is fairly arguable that an attorney for a close corporation owes a fiduciary duty to the individual shareholders. However, it is not necessary for us to resolve the question whether such a duty is owed in order to decide this case.". Id.

Ethical Considerations

Heightened Exposure to Liability

Tips For Attorney/Directors

Additional Resources