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CCCA61_032-034,036-038.qxd:CCCA_V1No1_DriversSeat-FIN.qxd 02/07/2008 06:12 PM Page 33 Feature Ethical challenges for in-house counsel By Sheldon Gordon Codes of professional ethics are an integral part of the legal profession’s self- regulatory status. However, the existing codes are heavily influenced by traditional private practice;by and large,they were not developed with in-house law departments in mind.Therefore, when in-house counsel turn to these codes for ethical guidance, they might find only limited help. n the light of highly publicized illegal behaviour at companies such as Enron,WorldCom and, more recently, Hollinger, public scrutiny has turned towards the role that in-house counsel play in corpo- Irate behaviour. At issue are the challenges corporate counsel face in terms of ethics, such as properly identifying the client, understanding the duty of confidentiality in the corporate environment, and blow- ing the whistle on improper conduct. Defining the client The in-house counsel’s client is the organization, not management — this is the cornerstone ethical proposi- tion for in-house lawyers.“It’s pretty clear who the client is,”saysAndré Laurin of Lavery,De Billy in Montreal. “If you’re the in-house counsel, the client is the corporation, not your boss. “But you’re reporting to your boss,” he adds.“Your salary and your evaluation are determined by your boss.And most probably, the objectives given to you are from your boss.At times, it may be difficult to dis- tinguish between your obligation to the legal entity and your loyalty to the person you’re working with on a regular basis.” The greatest challenge facing a company’s chief legal officer is the relationship with her superior, agrees DeborahArmour,director of legal services at Powerex Corp.,a subsidiary of B.C.Hydro inVancouver.“The CEO will think you work for them, and you should have a strong relationship built on trust and confi- dence,” she says.“But there may be a course of action that you believe is not in the best interests of the cor- poration. You’re duty-bound, I believe, in those situations to speak up and point this out to the CEO. Depending on what those circumstances are, you may need to escalate that to the board.” SPYROS BOURBOULIS client even further.“Having the lawyer on the board while,at the same time,the lawyer is supposed to be pro- Of course, if the lawyer also happens to sit on the board, it complicates the notion of the organization as viding advice to the organization, is a recipe for huge difficulties,” says Professor Paul Paton of the Faculty of Law at Queen’s University. “If you’re in the position of being both advisor and decision-maker, the potential PRINTEMPS 2008 CCCA Canadian Corporate Counsel Association 33