Today's stringent reporting standards, more aggressive investigations and the general trend toward prosecuting individuals instead of corporations have led to an unprecedented level of personal criminal exposure for in-house counsel.
"Getting in trouble civilly in the past was common," says Dennis Codon, a partner at Robins, Kaplan, Miller & Ciresi, and a former general counsel of Unocal, "but now we're talking bigger stakes."
"Disclosure is an area where there's an enormous amount of pressure on general counsel," says Codon. "Management may have reasons not to disclose a particular fact in a particular quarter. When you get into situations where there's pressure to smooth earnings, the GC has to know what the business is all about. He or she needs to be independent, needs to stand tall."
It's not always easy, and lawyers who lack the backbone to stand up to internal pressure could pay for their lack of fortitude in jail. Codon describes one case in which an in-house counsel initially refused to approve a questionable action. The company chairman leaned on him hard, and the lawyer eventually gave in. When the act came under investigation, the liability was in the lawyer's lap.