This is why they get paid the big bucks

No wonder there are so many lawyer jokes in circulation! (Locally, there are just as many civil servant jokes … but I digress.) From the print edition of Saturday’s Globe and Mail — part of their coverage of the Conrad Black verdicts:

The guilty verdicts handed down by a Chicago jury yesterday have sent a wake-up call to the legal profession. Not because of Conrad Black’s conviction, but rather because of the verdicts handed down to two low-profile lawyers who once served as his in-house counsel.

The jury convicted Toronto lawyer Peter Atkinson and Chicago lawyer Mark Kipnis each of three counts of mail fraud for their involvement in a number of transactions that illegally enriched Hollinger International Inc. executives. Essentially, the 12 jurors found that the two lawyers had failed to be good lawyers by not living up to their fiduciary duty to act in the best interests of the company.

Richard Breeden, former chairman of the Securities and Exchange Commission and a court-appointed monitor of Hollinger International, said the verdicts send a message to lawyers about their “very high duties as guardians” to protect companies from wrongdoers.

“Fiduciary duties matter. It’s not a musty arcane theory from the 11th century that can be dismissed as being of no value to the modern world. … General counsels have a responsibility to blow the whistle when something is out of bounds. They didn’t do it at Hollinger. They were enablers, not gatekeepers,” Mr. Breeden said.

This story is absurd, isn’t it? For obvious reasons, lawyers can’t plead ignorance of the law! Surely they know what their function is in the overall system, and they know the penalties for any failure to carry it out.

But these lawyers are shocked! Shocked, I tell you!

The prospect of [Atkinson and Kipnis] serving time is already sending a cold blast through the legal circles.

“This has caused tremendous anxiety in the legal community around the world,” said Jeffrey Sonnenfeld, senior associate dean with Yale University. …

Gavin Mackenzie, treasurer of the Law Society of Upper Canada and a leading legal ethics expert, said he is “surprised” by yesterday’s verdicts and expects them to have a big impact in lawyers’ conduct in public companies.

“This sends a message to Canadian lawyers that they have to take very seriously their duty to be cautious, and vigilant, that the transactions they are working on are lawful. They have to ensure that they have not been used,” he said. (emphasis added)

News flash to lawyers everywhere:  your job is to ensure that the transactions you work on are lawful. It’s shocking, I know. Even a high-ranking official in the Law Society of Upper Canada — an expert in legal ethics — is startled by this revelation.

All this time that you’ve been collecting the big bucks, you didn’t think you had any actual responsibility. It’s a tough old world, isn’t it? There’s no such thing as a free lunch.

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10 Comments (+add yours?)

  1. juggling mother
    Jul 19, 2007 @ 14:57:04

    Of course, other than in the US, only a few laywers make big bucks, most just work for a normal wage – and us poor b***** at the bottom barely get minimum wage……

    But here in the UK we’ve been busting lawyers for years:-) Financial irreglarities are a hot topic as last year some poor laywer got himself a prison senatnce, license to practise revoked for ever and a couple years salery fine for accepting £300 without checking where it was from. The fact that even if he had checked, he wouldn’t have known it was dodgy was irrelevant – he didn’t check & he sould have done. he’s a lawyer, even though he has no expertise or even experience in financial matters, he was responsible.

    Its called responsibility for your job:-)

    Reply

  2. Bill
    Jul 20, 2007 @ 12:39:46

    I guess Lawyers will always be untrusted.

    “The first thing we do, let’s kill all the lawyers.”

    Act IV Henry VI Part 2
    William Shakespeare

    Reply

  3. 49erDweet
    Jul 20, 2007 @ 14:14:23

    On the whole, a great many Lawyers seem to ask the rest of us to distrust them. I have no problem with the “adversarial” modus of the common legal system, except that too many of them misunderstand that term thinking it means to “completely break” their opponent and counsel. They are not satisfied in simply “restoring” their client. Strange breed of creatures, what? Remind me of the laughing variety of carnivorous creatures inhabiting the plains of Africa.

    Cool post.

    Reply

  4. juggling mother
    Jul 22, 2007 @ 04:20:02

    “I have no problem with the “adversarial” modus of the common legal system”

    Personally I think it’s an awful system. It dates from feudal times – and even then what we have now is a barstardisation of what they tried to have then!

    As someone working in the law I can honestly say that in a vast number of cases imo the lawyers make things worse! And cost a lot of money:-) I truely believe that the whole legal system needs to be binned and we should start agan with new system……sadly I do not know what that system should be, but I am sure there are people out there who could come up with a better one than we have, which we seem to have dumped on half the rest of the world.

    Reply

  5. aaron
    Jul 25, 2007 @ 10:40:16

    As you know, I’m a lawyer, but a government one rather than one in the private sector (so I can be the butt of two sets of jokes). Corporate law is a nasty business, which, along with a lack of interest in getting paid to help the rich get richer, is why I decided long ago that I had no interest in practicing it.

    All the same, while I’m certainly not defending the behavior of these two lawyers, your post ignores that they were put into a difficult situation. The lawyers owe a duty to the company, and that generally involves representing the officers of the company, as the officers are the ones whose jobs are to determine and look out for the best interests of the company. Those same officers are who write the lawyers’ paychecks and to whom they report. Should the officers ask them to do something illegal (and yes, this is the point at which the interests of the company and the officers clearly diverges), and if the lawyers refuse to do as asked, there’s the very real possibility that the lawyers will be fired. And it’s not at all clear that they’d get hired elsewhere — hiring isn’t performed by companies to whom they would owe a fiduciary duty, but by company officials who expect employees to do as they’re asked.

    The lawyers unquestionably made the wrong choice, but I disagree with your characterization of the decision as easy and obvious.

    Reply

  6. Stephen
    Jul 25, 2007 @ 11:18:37

    Point taken: the lawyers are part of a system that coerces them into doing unethical, maybe even illegal things. And that puts them in a difficult position.

    Nonetheless, it’s bizarre to me that legal experts are surprised that Atkinson and Kipnis will have to serve jail time. It’s one thing to say, “This puts lawyers in a difficult position”; it’s another thing to say, “We didn’t know we could go to jail for approving illegal transactions!”

    What you’re telling us about the system is hardly encouraging: all corporate lawyers are earning big bucks to carry out exactly the sort of transactions they’re supposed to prevent?

    In that case, more power to the prosecutors. We should start throwing more corporate lawyers in jail, until the system changes.

    Reply

  7. aaron
    Jul 25, 2007 @ 12:19:34

    What you’re telling us about the system is hardly encouraging: all corporate lawyers are earning big bucks to carry out exactly the sort of transactions they’re supposed to prevent?

    In that case, more power to the prosecutors. We should start throwing more corporate lawyers in jail, until the system changes.

    You seem to be suggesting that corporate lawyers earn “the big bucks” to serve as company ethics officers, and that isn’t correct. A more accurate characterization is to say that in the course of performing as lawyers (e.g., negotiating and interpreting contracts with other companies, mergers and acquisitions, and dealing with government regulators), they have a professional responsibility to be ethical, and to advise the company’s officers of potential legal and ethical concerns. Further, as citizens they are subject to the same laws as anyone else.

    Reply

  8. Stephen
    Jul 25, 2007 @ 12:58:17

    Thanks for hanging in there with me, Aaron.

    Re “big bucks” — I know these things are relative. But surely you’ll agree that people go into corporate law because they can make a very good living there. Not as good a living as Conrad Black, but considerably better than the general population.

    In terms of obligations, I was thinking of Richard Breeden’s comment. He says these lawyers have a fiduciary duty: specifically, “general counsels have a responsibility to blow the whistle when something is out of bounds.”

    My impression is, the role of these lawyers was similar to that of a Chartered Accountant. They were responsible to certify, “I have scrutinized this transaction and found it to be lawful”. That was their job and they were acting contrary to it.

    Am I misunderstanding something? I’m basing my conclusions on the newspaper account; maybe it’s errant.

    Reply

  9. aaron
    Jul 25, 2007 @ 13:19:42

    No argument on “big bucks” (shouldn’t have used quotes, but was doing so to indicate that those were your words). The issue I had was on what they’re hired for, i.e., that they’re hired first and foremost to perform complex negotiations and interpretations, etc., whereas I read your characterization of their job to be ethics officer first and foremost. And as I indicated in my first response, I agree that the lawyers were supposed to speak up rather than go along with the crime.

    As for the comparison with accountants, not as sure. The certification you’re talking about takes place when the financial books are made public, right? That sounds similar to what a lawyer does when s/he submits a legal document to a court or regulatory body, when there’s essentially a certification that what’s being represented in the document is the truth. I don’t know that accountants are required to certify anything that isn’t submitted publicly, and (admittedly not following the case but) I thought that the lawyers here have been convicted for something that didn’t involve publicly filed documents. They’re still required to behave ethically and not break the law, but I don’t think it has anything to do with a certification.

    And I guess that as we’re having this discussion, it goes without saying that Canadian vs. American law may make a difference here — I’m not sure of the exact differences that exist.

    Reply

  10. Stephen
    Jul 25, 2007 @ 13:28:12

    Heavens, I don’t know either the Canadian or the American law on this topic. I know a little law (just enough to make me dangerous), but not on the corporate side.

    I didn’t follow the trial very closely, although I dipped into media reports at intervals. My impression is, the lawyers were certifying to the shareholders that these transactions were on the up-and-up. They were in a watchdog role.

    Which is not to dispute the point you made at the outset: if they performed their job very scrupulously, they likely would have been unemployed. The whole twisted system offends me — hence the mocking tone of the post.

    Reply

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