Dewey & Leboeuf Retrial Ends in a Split Verdict

For those of you following the Dewey & LeBoeuf criminal trial, you know that the jury deadlocked in October 2015 after nearly six months of deliberations on dozens of charges against Steven H. Davis, the former chairman of Dewey, and two other former executives of the law firm, Stephen DiCarmine and Joel Sanders. The three men were accused of being the architects of an accounting fraud that enabled Dewey to defraud its lenders and creditors during much of the financial crisis.

In January and February 2016, Manhattan Prosecutors reached deferred prosecution agreements with Steven H. Davis and Zachary Warren, one of the original defendants.

The Manhattan prosecutors retried the case against DiCarmine and Sanders, the remaining defendants, in the New York State Supreme Court in Manhattan.  In May 2017, the jury delivered a split verdict.  Joel Sanders, the law firm’s former chief financial officer, was convicted on three criminal counts.  He could be sentenced up to four years in prison. Stephen DiCarmine, the former executive director, was acquitted of the same charges.

Update on the case can be found here.

Manhattan Prosecutors Plan to Retry Remaining Dewey and Leboeuf Defendants

For those of you following the Dewey & LeBoeuf criminal trial, you know that the jury deadlocked last October after nearly six months of deliberations on dozens of charges against Steven H. Davis, the former chairman of Dewey, and two other former executives of the law firm, Stephen DiCarmine and Joel Sanders. The three men were accused of being the architects of an accounting fraud that enabled their law firm, Dewey & Leboeuf, to defraud its lenders and creditors during much of the financial crisis.

In January and February of this year, Manhattan prosecutors reached deferred prosecution agreements with Steven H. Davis and Zachary Warren, one of the original defendants.

The Manhattan prosecutors are now planning to retry the case against DiCarmine and Sanders, the remaining defendants. The trial is expected to begin early next year in the New York State Supreme Court in Manhattan – just in time for your spring semester 2017 P.R. classes. Apparently, DiCarmine has communicated that he wants to replace his longtime lawyer, Austin Campriello.

Update on the case can be found here.

 

Inside (Inhouse) Lawyers: Friends or Gatekeepers?

Those of you teaching Chapter 6—The Lawyer’s Duties to the Legal System, the Profession, and Nonclients—might be interested in an article of mine just published by the Fordham Law Review for its Lawyering in the Regulatory State Symposium.  In the paper, using the GM ignition switch scandal as a point of departure, I critique the common assertion that our legal system is best served if the corporate in-house lawyer conducts his/her relationships with senior corporate managers according to the “lawyer as friend” model. I argue that there are numerous problems with the model, not the least of which is the invariably (and perhaps intentionally) vague way in which the model is invoked.  Those who invoke the “lawyer as friend” model repeatedly assert that the senior corporate manager needs to be able to repose “trust and confidence” in the inhouse lawyer. Unfortunately, they never explain: trust and confidence in what?

As a matter of professional responsibility and fiduciary obligation, the lawyer cannot reassure the manager that his communication will remain confidential or that the manager will be shielded from adverse consequences. If the corporate senior manager is engaged in material wrongdoing that may harm the corporate entity, that manager will usually not be entitled to those assurances.  As William Simon has explained, the authority to invoke or waive the organization’s confidentiality rights usually belongs to the organizational agents different from those who made the confidential communications. Because the lawyer may be required to testify against the manager in a court of law, it would be entirely inappropriate for the lawyer to reassure her colleague of her continuing loyalty or confidentiality.  The lawyer’s duty of confidentiality will not block disclosure within the organization, and it will not prevent the organization from divulging information outside of the corporation, no matter how harmful internal or external disclosure is to the manager. Indeed, the only thing that the lawyer can properly promise the manager is that she will listen carefully and not rush to judgment, which is the behavior that anyone would reasonably expect of a competent professional (irrespective of any preexisting friendship). To suggest that lawyers should invite the manager’s trust and confidence and then—if the lawyer encounters evidence of material misconduct—turn around and report that manager to higher-ups basically advocates a bait and switch model. This “bait and switch” does not sound like friendship, which is precisely why the “lawyer as friend” analogy should be abandoned.

To be sure, in the best possible world, the senior corporate manager backs down from his illicit plan. This good result may be reached through some form of moral dialogue that legal scholars are right to recommend. What many folks ignore, however, is the sobering reality that persuasion does not always work. Not all lawyers will be skillful in the art of moral suasion, and—frankly—most law schools do not train students in moral suasion. Also, sophisticated senior managers, who find themselves in desperate enough situations to be considering wrongdoing in the first place, may not be receptive to the lawyer’s (perhaps feeble) attempts at moral suasion.

Perhaps those invoking the “lawyer as friend” model are merely saying lawyers should be “friendly”?  Unfortunately, that commits the fallacy of confusing “friend” with “friendliness.”

If you’d like to read the whole article, it can be downloaded from SSRN here:

The entire issue of the Fordham Law Review Lawyering in the Regulatory State Symposium can be found here.

 

Lawyer Suspended for Using Info Divorce Client Obtained via Guessing Wife’s Password

The ABA Journal reports today that the Missouri Supreme Court suspended a lawyer for using the information obtained by the lawyer’s divorce client, who obtained the information by accessing the wife’s email without permission (husband guessed his wife’s email password).  The information obtained included:

  • current payroll documents of wife; and
  • a list of direct examination questions prepared by wife’s lawyer.

The court found that the lawyer violated the following Missouri Rules of Professional Conduct:

  • Rule 4-4.4(a), which prohibits a lawyer from using “methods of obtaining evidence that violate the legal rights” of a third party;
  • Rule 4-8.4(c) which prohibits a lawyer from engaging “in conduct involving dishonesty, fraud, deceit, or misrepresentation;”
  • Rule 4-3.4(a) which provides, in part, that a lawyer shall not “unlawfully obstruct another party’s access to evidence or unlawfully alter, destroy, or conceal a document or other material having potential evidentiary value;” and
  • Rule 4-8.4(d), which prohibits a lawyer from engaging “in conduct that is prejudicial to the administration of justice.”

The court noted that the lawyer had been disciplined five times previously.

You can find the opinion here.

Former Prosecutor Disciplined for Contacting Alibi Witnesses through Fictitious Facebook Account

The Ohio Supreme Court in Disciplinary Counsel v. Brockler recently imposed a stayed suspension on an ex-prosecutor who used a fictitious Facebook account to contact alibi witnesses in a criminal case that he was prosecuting. The discipline came after the prosecutor had been fired for “his unethical conduct in creating false evidence, lying to witnesses and another prosecutor, and damaging the prosecution’s chances in a murder case . . . .”

The Court found that the prosecutor doubted the alibi witnesses’ stories and created a fictitious Facebook account to contact the witnesses.  In setting up the account, the male prosecutor used a pseudonym, posed as a woman, and added pictures, group affiliations, and “friends” that he based on the defendant’s jailhouse telephone calls and Facebook page.  He contacted the witnesses claiming that he was romantically involved with the defendant, and he discussed the alibi as if it were false.  He had separate Facebook chats with two witnesses, and he tried to get them to admit that they were lying for the defendant, or would lie for him, and he tried to convince them to talk with the prosecutor.  After chatting with them for several hours, he thought that they were becoming suspicious so he printed out copies of the chats, put them in the case file, and deleted the Facebook account.

Subsequent to being fired and before his disciplinary hearing before the Board of Professional Conduct, the prosecutor gave press interviews in which he claimed that such ruses where common among prosecutors to get at the truth and that he did this to keep a murderer behind bars.  A year after he was fired, the defendant was convicted of aggravated murder and other related charges.

Prior to the hearing, the prosecutor entered into a stipulation that he had violated Rule 8.4(c), which prohibits a lawyer from engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation.  He urged the disciplinary board to carve out an exception for “prosecutorial investigation deception.”The board refused to do so, noting that it had  previously disciplined three non-prosecutors for engaging in dishonest conduct involving contact with witnesses in their clients’ cases.  The board also found the former prosecutor guilty of Rule 8.4(d), engaging in conduct prejudicial to the administration of justice.

The Ohio Supreme Court upheld the board’s findings, but split 4-3 on the sanction of a stayed one year suspension from the practice of law.  Two of the dissenting justices favored the one year suspension without a stay, and one justice favored an indefinite suspension.  In the prior cases involving non-prosecutors, two lawyers received stayed six-month suspensions for making misrepresentations to a client’s former landlord to see if the landlord would slander the client, and one lawyer received a one-year suspension, six months stayed, for intimidating a deposition witness by creating the false impression that the lawyer had compromising person information that could be used against the witness.

This case, and other cases, should serve as warnings about the limits of advocacy.  While seeking truth is noble, using deceit and misrepresentations in an effort to help one’s case is going beyond what the ethics rules allow.

Former GE General Counsel Ben Heineman Gives Advice to In-House Counsel

The April 2016 issue of Corporate Counsel Magazine (subscription required) features an article by Ben W. Heineman, Jr., who served as GE’s senior vice president-general counsel from 1987 to 2003 and then senior vice president for law and public affairs from 2004 until his retirement at the end of 2005. Heineman is currently a senior fellow at Harvard’s schools of law and government. The article contains excerpts from Heineman’s much-anticipated forthcoming book, The Inside Counsel Revolution: Resolving the Partner-Guardian Tension (Ankerwycke, 2016).

In the book, Heineman makes the case for his ambitious vision of the modern general counsel: “a lawyer statesperson who is an outstanding technical expert, a wise counselor and an effective leader, and who has a major role [in] assisting the corporation [to] achieve the fundamental goal of global capitalism: the fusion of high performance with high integrity and sound risk management.” In carrying out this role, the general counsel must resolve “the most basic problem confronting inside lawyers: being partner to the board of directors, the CEO and business leaders but ultimately being guardian of the corporation.” Accordingly, the book provides some guidance on how to resolve the partner-guardian tension that is inherent in the role.

The book can be pre-ordered here.

Deferred Prosecution Agreements Reached with Former Dewey & LeBoeuf Lawyers

It’s always a good idea to remind your students to be careful if they should ever take on the responsibility of managing a law firm, especially in times of financial bust. If you have been following the Dewey & LeBoeuf criminal trial, you know that the jury deadlocked in October of last year on dozens of charges against Steven H. Davis, the former chairman of Dewey, and two other former executives of the law firm, Stephen DiCarmine and Joel Sanders. The three men were accused of being the architects of an accounting fraud that enabled Dewey to defraud its lenders and creditors during much of the financial crisis.

In January of this year, Manhattan prosecutors reached a deferred prosecution agreement with Steven H. Davis. The agreement runs for five years and prohibits Davis from practicing law in New York during that period.

In February, prosecutors reached a deferred prosecution agreement with Zachary Warren, one of the four original defendants, just weeks before he was supposed to go on trial in the New York State Supreme Court in Manhattan. Notably, Warren was not a lawyer when he worked as the client relations manager at Dewey & Leboeuf. After leaving Dewey, he went on to graduate from Georgetown Law Center and clerked for a federal judge.  He plans on working at Williams & Connolly in the fall.   The agreement requires Warren to perform 350 hours of community service as part of a one year agreement.

The Manhattan prosecutors are planning to retry the case against DiCarmine and Sanders.

Articles about the agreements reached with Davis and Warren can be found here and here.