It is one thing for the CEO to off-handedly toss some ticking employee-relations timebomb up to the boys in legal for defusing. It is quite another for the attorney to please, prosecute, and still keep the company unscathed by all the ensuing legal and media shrapnel.
To keep his client company safely operating on this thread-thin track, today’s corporate attorney has to arm himself with a host of unexpected specialties. To provide a summary of these business law caveats, the New Jersey Institute for Continuing Legal Education presents “What Employment Lawyers Need to Know About Other Areas of Law,” held Tuesday, March 16, at 4 p.m. at the Pines Manor in Edison. Cost: $179. Visit www.njicle.com. Speakers include #b#Bruce Goldstein#/b#, attorney with Sills Cummis & Gross in Newark; #b#David Ben-Asher#/b# of the Edison law firm Rabner, Allcorn, Baumgart & Ben-Asher; and #b#Gerald Cline#/b#, attorney with Markowitz Gravelle in Lawrenceville.
“I knew I wanted to be a litigator ever since I was 10 years old,” says Goldstein, who has fulfilled that dream for the last three decades. Despite his podiatrist father’s wishes that he follow in the family footsteps, Goldstein took his bachelor’s from Rutgers University in 1964 and went straight to Cornell Law School. He clerked for a year and then worked as an assistant U.S. attorney. He quickly advanced to chief of special prosecutors and then executive assistant U.S. attorney responsible for prosecuting political corruption.
Stepping into private practice, Goldstein joined the Newark firm of Saiber, Schlesinger Satz & Goldstein, where he litigated on many aspects of corporation law. “It takes a special kind of person to be a litigator,” says Goldstein. “The work is long and often onerous, but I love the thrill of going for the jugular; of solving the puzzle and advocating in an adversarial system.” After 30 years as partner, Goldstein left his old firm in 2008 to join Sills Cummis & Gross where he still handles business litigation.
“When you are investigating a company for criminal fraud, whether you are part of an internal or external team,” says Goldstein, “every decision is markedly sensitive and individually fact-driven.” The investigating attorney is forced to draw ethical lines in the sand, often with little guidance from legislation and precedent.
#b#Whom do I serve#/b#? “Probably the only golden rule for the attorney called in to ferret out possible wrongdoing,” Goldstein notes, “is that the corporation is always your client. Your obligation runs first to that entity.”
Sounds simple enough. But questions arise. When does serving one’s client cross over into conspiratorial servitude? The investigating attorney is required to report all criminal or fraudulent acts to the audit board, the general counsel, or whomever hired him initially. But the attorney must bring his allegations and evidence to him with no reservation about how such findings will effect the company, or its shareholders.
The Sarbanes-Oxley Act clearly nixes the slightest whiff of auditor nondisclosure of financial woes to help show his client company in its best light. No attorney wants to hand his client over to the government. But SOx’s thunderous penalties inspire all investigators to set integrity first, to report the truth totally, while turning a blind eye to its eventual outcome of his client corporation.
Another source of investigative tension arises from the attorney’s relations with the individuals investigated. Investigations invariably are hunting expeditions, casting a broad net. Often, particularly with internal investigations, the attorney personally knows the individuals he questions.
Taken aback by these seeming suspicions, many employees will ask with no little fear, “do I need a lawyer before we talk?” As an attorney, his answer must be honest and appropriate; as an investigator who often has no facts at this point, he must seek to operate swiftly and unhampered.
“You also face the additional question of the individual investigated as a vested part of the corporate client who hired you,” says Goldstein. Yet even if allegations lead to a company’s major stockholder, Goldstein argues that the integrity of reporting and the serving of the corporate whole take precedence over the individual.
#b#Whistleblower protection#/b#. Most of us hold a David v. Goliath image of whistleblowers. The concept of one person with God and honesty in his heart, slinging his stone of truth to bring down an evil corporate empire strikes us as very satisfying.
“In the real world,” says Goldstein, “people become whistleblowers for a whole variety of reasons.” And the accuracy of their accusations cannot be taken as golden, simply because they are hurling them at the company that pays their salary. Whistleblowing has frequently come about by individuals complicit in a fraud, and seeking immunity of sorts. Seekers of revenge are not above reporting real or embellished accusations.
“Companies, of course, may take no retaliatory action against a whistleblowing employee,” notes Goldstein. “But that in no way saves him from the plethora of civil and criminal charges stemming from his actions.” The attorney’s antennae must always be up and sensitive. Employees do have certain rights to privacy, but their every job-related activity, whether performed in or outside the workplace, lies open to investigation.
#b#In the harsh light#/b#. For the company falling under the scrutiny of a fraud or criminal investigation, Goldstein suggests a few simple tactics. First, get a handle on the full scope of any and all allegations of wrongdoing. Determine what departments, individuals, and transactions might possibly be involved, then put a hold order on all documentation involved. Don’t delete anything from these departments. Too often a company’s routine periodic purging of past records will destroy documents and initiate questions of cover up.
Secondly, address the issues head on. Meet with the accusers, if possible, or the auditors, and nail down the exact allegations and any official charges. Then call in your firm’s legal counsel and have it bring in any outside specialists. Individuals may or may not seek to contact their own attorneys. Erring on the side of self preservation may not be a bad way to go.
From a simple off-the-books payment to a complex collusion to stock manipulation, the number of financial schemes and swindles seems endless and constantly renewing.
Fortunately, there is an equally increasing number of laws to counteract the destructive sides of these natural inclinations. For the company’s senior executives, handling this legal and ethical onslaught becomes like managing any other corporate department — keep up with general facts and latest changes, then hire top professionals to wade through and keep you on the legal straight and narrow.