A New Role is Born: Officer of the Executive Branch

For some time now, there have been only four master roles for lawyers: representative of clients, third-party neutral, public citizen, and officer of the court.  The roles are found in the Preamble to the Model Rules. 

But, quietly and almost unnoticed, some US lawyers have effectively adopted a fifth role: Officer of the Executive Branch.  The paradigm example arises when the DOJ uses the Thompson and Holder Memorandums to outsource their oversight and investigation functions to private law firms.  When a catastrophic corporate failure occurs, the DOJ advises the corporation that the DOJ might charge the company with a felony -- but, just maybe, the DOJ won't do that if the company hires top-notch white collar lawyers to do an immediate investigation, waives all privileges, and turns over the lawyers' notes and work product to the prosecutors. 

As former SEC Commissioner Joseph Grundfest says, that leaves the corporation with no choice at all.  Being charged with a felony can make the stock price plummet overnight, or can drive away the corporation's client base.  Ask Arthur Andersen about it.  Or ask KPMG.  So the corporation does the investigation the DOJ's way.  It hires private lawyers to investigate.  It waives the privilege.  It produces produces internal documents.  It turns over the lawyer's interview notes. It closely coordinates the investigation with the DOJ, each step of the way. 

The DOJ takes the position that there's no way to efficiently unravel complicated corporate fraud other than to have the private lawyers do it for the DOJ.  But, to put a fine point on the private lawyer's role as an officer of the executive branch, the DOJ also says that when a corporate employee lies to the law firm investigators, a felony is committed.

What are the downsides to this new role?  The whole concept gives me the creeps.  But I'm not claiming that the sky is falling.  Lawyers have always balanced their duties as representatives of clients and officers of the court. For example, the zealous litigator presents only one side of the story but the same litigator, as an "officer of the court," refuses to suborn perjury, intimidate witnesses, or lie to the judge.  Can  the new role of "officer of the executive branch" could serve a similar balancing function?

It was a couple decades ago that scholars writing about legal ethics noted that we had mistakenly conflated the litigator's role and the role of advising clients about administrative agencies -- that we needed to recognize a different set of rules for administrative compliance advice outside the litigation setting.  Indeed, the Kaye Scholer affair was born of that confusion.  So, maybe it's high time to enshrine the role "officer of the executive branch" right next to "officer of the court."

But there are real dangers, of course.  First, this new "officer of the executive branch" role involves such close coordination with the prosecutors that the comparison to "officer of the court" seems strained.  Courts are quite passive compared to bureaucratic agencies. Second, as a political matter, the bar is supposed to act as a counter-weight to the federal government, not as its agents.  We know that the federal government has its own agendas, foibles, and bureaucratic bias.  So, as Grundfest says, if this new development is to avoid a pathological turn, it will take discretion and judgment on the federal government's part, and perhaps some oversight as well.  I will finish with an excerpt from Grundfest's recent article, which is well worth reading.  (I saw Grundfest speak recently, and it crystallized my thoughts about this development.)

The downside is just as clear. The prosecutor's decision to indict is largely immune from judicial review. The prosecutor acts as judge and jury. Traditional due process safeguards, like the right to confront witnesses, can't protect the potential corporate defendant. The innocent can therefore be punished as though they are guilty, and penalties imposed in settlements need not bear a rational relationship to penalties that would result at a trial that will never happen.

What is to be done? Perhaps nothing - if prosecutors are uniformly careful in interpreting the law, scrupulous in understanding the facts, and balanced in settlements imposed on effectively defenseless defendants.  . . . .  Sober observers thus have some cause to search for checks and balances to assure that prosecutors exercise their life or death power over corporations responsibly.

Where will these safeguards come from? We can't look to the courts, because well-established doctrine protects the prosecutor's decision to indict as non-reviewable. At the federal level, will Congress and Justice Department officials more actively review the decisions made by line prosecutors? Will commissioners at the Securities and Exchange Commission exercise greater oversight of staff investigations and settlement negotiations? 

Of course, lawyers might be expected to play that role.  But if the threat of a felony causes the corporation to instruct the lawyers to act as the DOJ's agent, then how can the lawyer play the oversight role?  It will be an interesting few years as these issues get worked out.

UPDATE:  Peter Henning, of White Collar Crime Blog, was kind enough to link to this post and comment on it.  I used the word "unnoticed," which gave Peter some pause, so I want to clarify what I meant. 

Certainly the Thompson and Holder Memos have been widely discussed and in many circles widely rued.  What struck me when I was recently listening to Joseph Grundfest speak about the state-of-the-art DOJ investigations where the prosecutors coordinate and micro-manage the private lawyers, was the notion that lawyers might owe a duty to the executive branch no less than they owe a duty to the judicial branch.  Hence my suggestion that some of us are acting like "officers of the executive branch."

That role may strike us as absurd, but how can we distinguish it from the litigator's simultaneous roles as representative of the client and officer of the court?  If the role were recognized and properly cabined, it might usefully clarify what lawyers ought to do.  We've seen sporadic movements toward that role.  I mentioned the Kaye Scholer affair, where many observers believed that the law firm owed the administrative agency more candor, more cooperation, and more coordination.  We've recently seen the IRS publish new regs forbidding lawyers from basing certain opinions on the likelihood of being audited and the likelihood of getting caught.  No doubt more such innovations are headed our way.

I don't like the current process of coercing cooperation at the threat of a "corporate death penalty."  But the federal regulation of lawyers was a slumbering giant that is now quite active.  To some degree, the role of "officer of the executive branch" is an inevitable addition to the lawyer's roles.  The battle will be about balancing that role against the role of "representative of clients." 

That balancing will be affected by the obvious differences between a court and an administrative agency.  On the one hand, the lawyer may need to be more candid with an administrative agency than with a court, because the administrative process is not adversarial and no one tells the "other half of the story."  On the other hand, the administrative agency is not nearly as neutral as a court of law and the agency's ability to act as judge, jury and executioner will necessarily affect what kind of "officer of the executive branch" lawyers should be.  But I think that recognizing the role will help focus the debate and help lawyers internalize the new rules of the game.

Comments

[Jim Fischer]

Back in the 1970s, the SEC used a similar tactic when public companies ran afoul of the Securities Acts -- the appointment of "Special Counsel". "Special Counsel" was a queer duck, neither fish nor foul. The company selected counsel, with the consent of the SEC, and paid counsel to investigate the client and report the findings to the SEC. It was an early version of "outsourcing". In the one case I was involved in, we spent a considerable amount of time trying to define our role before we began the assignment. As I recall we took the position that the company was our client, but that it was a limited representation. When we interviewed client constituents, we gave them a Miranda warning, not your typical attorney - client conversation starter. Notwithstanding the unusualness of the relationship, the work was accomplished to the satisfaction of all involved. A lot of this was the product of the integrity and good judgment of the lawyer who was selected as Special Counsel -- Seth Hufstedler. Transferring the outsourcing function from an administrative agency to a prosecutorial agency does give me some pause. There is a risk that the criminal investigation will be conducted without the transparency that would be available when the work is done by law enforcement. I'm also not sure how entrenched the practice will become. The "Special Counsel" practice did not become a cottage industry. I don't know how DOJ's effort to adopt the practice to its own use will fare.

[John Steele]

Jim:

Thanks for that comment. I had never heard of that process but you're right that it sounds like a forerunner of today's process. Like you, I fear this conflation of administrative agency and prosecutor. If the prosecutor says, "respond to me like a prosecutor and I'll indict you, so pretend as if I'm simply an administrative agency," then the feds are having their cake and eating it too.

At the same time, I was surprised to find myself concluding that, within bounds, "officer of the executive branch" isn't as absurd to me as it initiall sounds.