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    May 1, 2008  
 
 

WHEN TO GO TO OUTSIDE COUNSEL


Pillsbury's Employment & Labor Group on May 8, from 8-10 AM, hosts a complimentary breakfast briefing on: Protecting trade secrets, common mistakes on the wage/hour front, navigating leave laws, and other issues. Please RSVP to Jennifer Ramsey.


 

Baker Botts securities enforcement expert Jim Doty had just scored a big victory when we dropped in on him last week, but as usual he couldn't talk about it. "You don't get popular crowing about your wins," says Jim, former SEC General Counsel ('90-'92), who would make neither his client nor the Commission happy by talking about an investigation he helped nip in the bud. But lucky for you, Jim (just named a  corporate governance "leading lawyer" by Legal Times) is much more generous about sharing his practice tips.     

 

Jim led the internal investigation of the accounting scandal at Freddie Mac in '03. Our sophisticated investigative techniques (like checking pictures on the wall) also uncovered the fact that he gave not-yet-President Bush investment advice on the Texas Rangers.

 

Jim says that in this day of fuller corporate reporting and heightened audit committee scrutiny, "a lot of the stress falls on in-house counsel," who may be tempted to demonstrate their competence by handling tough calls themselves. Not always a smart move, especially when decisions to charge are based in part on what personnel (if any) have been brought in to help with compliance. So we asked: What issues should GCs get an outside perspective on?

 

Jim gave us some (non-exclusive) instances:

    • Self-Reporting and investigation: Not every internal incident should lead to an audit committee investigation, and not every investigation should be reported to the SEC—but it can look bad if the GC consults on those decisions only with the CFO and CEO. A good outside counsel, says Jim, should be able to voice an informed opinion on those questions "without tearing up the floorboards" or striking fear in the heart of employees.

    • Remediation: Dealing fairly with employees involved in wrongdoing can be difficult from the inside, especially when the situation implicates Sarbanes-Oxley whistle-blower protections.
 

The hottest enforcement area? Foreign Corrupt Practices Act prosecutions, Jim tells us. The number of FCPA proceedings settled last year was double that of 2006, and there are 150 cases currently open (most of them with both the DOJ and SEC).

    • Document sharing: Jim's no fan of the fact that work-product protections don't apply after documents are shared with the government to ally concerns about compliance. He can't change the rule (he's only human), but he says outside counsel can help balance the goals of maintaining confidentiality and warding off prosecutions.
    • Compensation reporting: The executive compensation section of a proxy statement can often be the longest. Determining the categories of compensation is typically an in-house lawyer's specialty, but Jim says that making sure everything's included—does that free round of golf count?—occasions judgment calls on which outside counsel can help.

    John Ford is Bisnow's Managing Editor.  He loves hearing your story tips, so pass them on to john@bisnow.com.

 
 
 
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