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11 Legal Ethics 201 (2008)
Keeping It in-House: Ethics in the Relationship between Large Law Firm Lawyers and Their Corporate Clients through the Eyes of in-House Counsel

handle is hein.journals/lethics11 and id is 201 raw text is: Legal Ethics, Volume 11, No. 2

Keeping it In-House: Ethics in the
Relationship between Large Law Firm Lawyers
and their Corporate Clients through the
Eyes of In-House Counsel
In a number of recent corporate ethics scandals external lawyers have been criticised for
being too close to their corporate clients. Supposedly independent, external lawyers have
failed to speak out against unethical or illegal client conduct, and in some cases have even
assisted in devising or covering up misconduct.'
For example, the external lawyers involved in the James Hardie corporate re-structure
co-operated when in-house counsel requested that the words confidential and legally priv-
ileged appear in the footer of an actuarial report that estimated liabilities to those injured by
asbestos.2 It is clear that this report could not meet the requirements for legal professional
privilege.3 The internal and external lawyers also allowed corporate management to present
material to the board that was, in one of the lawyer's own words, so speculative as to be
potentially misleading.4 This ultimately led to the Foundation set up to compensate those
injured by asbestos being drastically short of funds.5
Law School, University of Adelaide.
* Melbourne Law School, University of Melbourne.
The authors are grateful to Susan Saab Fortney, Rob Rosen, an anonymous reviewer, and participants in the large
law firm stream of the 3rd International Legal Ethics Conference, Gold Coast, July 2008 for comments on earlier
versions of this paper. Suzanne Le Mire is grateful to the University of Adelaide for a faculty grant that supported
this research. Note that this article was double blind refereed, organised by the articles editor of Legal Ethics inde-
pendently of the special issue guest editors.
1 For example, an external law firm that was heavily dependent on Enron for a large part of its profits helped
Enron to cover up massive funding shortfalls through misleading financial reporting: M.C. Regan, Jr, Teaching
Enron (2005) 74 Fordham Law Review 1139; Deborah L. Rhode, Lawyers, Ethics and Enron (2002) 8 Stanford
Journal of Law, Business & Finance 9.
2 D.F. Jackson, Report of the Special Commission ofInquiry into the MedicalResearch and Compensation Foundation,
vol. 1 (2004), 213.
3 Ibid, 223.
4 Ibid, 237.
1 Suzanne Le Mire, The Case Study: James Hardie and Its Implications for the Teaching of Ethics in
B. Naylor and R. Hyams (eds), Innovation in Clinical Legal Education: Educating Lawyers for the Future (Legal
Service Bulletin Cooperative Ltd, Melbourne, 2007); Christine Parker and Adrian Evans, Inside Lawyers' Ethics
(Melbourne, Cambridge University Press, 2007), 237-41.

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