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Ethics : Safe employment for corporate counsel

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Cite as: (2003) 77(4) LIJ, p.84

Corporate lawyers have an obligation to interview prospective employers on their ethical stance.

Efforts by the US government to proscribe certain conduct by commercial lawyers as a response to the Enron collapse – particularly in-house corporate counsel[1] – are more likely to be imported into Australia if we see another HIH scandal in the near future. Although some will say that further large financial scandals are unlikely in the short-term, who can be certain?

So much of the in-house counsel role occurs away from scrutiny that the conventional regulators, such as the Law Institute’s Professional Standards Department and the Legal Ombudsman, rarely, if ever, get a look-in when things go haywire. Barring the collapse of the company, the in-house lawyer who stuffs up suffers, but usually without major public embarrassment. Yet this suffering is real. These lawyers suffer damage to their niche reputation, to their social standing in an elite network, in the eyes of their children and, if they are candid, to their own self-esteem.

The following suggestions are intended to reduce the risk of corporate calamity for prospective in-house counsel. With so much economic activity increasingly dependent on the spirit and not just the letter of corporate compliance programs, in-house lawyers have a huge role in steering their respective CEOs clear of the shoals of deceit. If they do not try to influence that course, or try and do not succeed, the reputation of all in senior management is at risk.

The challenge for prospective in-house practitioners is to pick the winner before they sign on. There are a number of questions practitioners can ask to size up the integrity of the corporate employer before they are committed to what might turn out to be a dangerous business strategy or corporate culture.

To begin with, if you, as the prospective in-house practitioner, are to be effectively responsible to someone who is not interviewing you – the selection process having been fully delegated to the human resources people – beware. Assuming this is not a problem, you will need to (respectfully) interview your proposed CEO as part of the selection process. Raise carefully, during your discussions with management, your general interest in the ethics of corporate culture. If your potential employer is bored, dismissive or indifferent to the issue rather than stimulated – reconsider. Those who are stimulated, rather than irritated, receive your next test: awareness of the thrust (if not the substance) of the US Sarbanes-Oxley Act[2] and the HIH Royal Commission. Then the real inquiries begin, structured and phrased as you see fit in the circumstances:

  • Is there a business plan that includes references to ethical conduct? Can you study it before your interviews commence? Are good principles of corporate governance, especially in relation to corporate and personal conflicts of interest, reflected in the business plan? Indeed, is there a current business plan?
  • Has there ever been a qualified audit report? If so, what were the circumstances? To whom do the internal auditors report? Is the internal audit report contracted out and, if so, to whom?
  • Has the company begun the transition to the higher disclosure levels of financial accountability, required by 2005? Is the transition a grudging process or is it being undertaken in the spirit of competitive advantage?
  • Is your (prospective) CEO comfortable about your (of course, hypothetical) access to the board in the event of a dispute about an ethical or legal issue affecting the company’s operations?
  • Given a (hypothetical) difference of opinion as to the company’s activities, how does your CEO feel about your own potential vulnerability to the professional regulators for misconduct? Is he or she concerned, or amused?
  • If, in subsequent discussion during the interview, your CEO begins to engage with the topic of ethics and then wants to draw a distinction between ethics, law and argues that the company will always operate within the law, what role is there for ethics as far as your CEO is concerned? What role is there for an ethical corporate lawyer in the company?
  • How aware is your CEO of “whistle-blowing” law? Is there an internal or external written policy relating to whistle-blowing? Has the policy ever been activated and, if so, in what circumstances? Are you seen as mischievous or provocative for raising the concept? Is your CEO offended by the question or merely curious?
  • Finally, how interested is the company in what really drives your ethical awareness, as opposed to whether you will just “do the job”?

This list is not exhaustive. It is also not meant to be some cheeky checklist that you use if you are half-hearted about the job and just want to have some fun in an interview to see what happens. The issues are real enough. The stakes if you misjudge your future employer – or they misjudge you – are phenomenally high. “Good” answers to these questions might identify a long-term successful position for you.


ADRIAN EVANS is associate professor in law at Monash University and former coordinator of Springvale Legal Service Inc.

ethics@liv.asn.au


[1] See “Promoting the pull” (2003) 77(1-2) LIJ 82.

[2] HR 3763, 107th Congress 2002.

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