Corporate Insiders Value Loyalty From Outside Counsel

Stay current on changes and developments in corporate law with a wide variety of resources and tools.

By Helen W. Gunnarsson

Loyalty and knowing when to have a telephone conversation are key for outside counsel to stay in the good graces of corporate general counsel and out of the “penalty box,” panelists David Hecker and Arthur Simon said Oct. 17 in discussing “Lawyers' Professional Responsibilities and Liabilities from Clients' Perspective,” during the 2014 Aon Law Firm Symposium in Chicago.

Hecker is general counsel of the infrastructure group for Peter Kiewit Sons' Inc. in Omaha, Neb., a construction, mining and engineering company. Simon is general counsel for William Blair & Co., a global investment banking and asset management firm headquartered in Chicago.

Moderator Lucian T. Pera, of Adams and Reese LLP in Memphis, Tenn., asked the panelists whether they have any concerns about how well the law firms representing their companies are protecting their confidential information.

While working on a matter, Hecker said, outside counsel often “learn more about our business than what they've been retained for. When we hear that come back to us from another source, we know they're not keeping shop talk to themselves” but instead are talking about company affairs with other lawyers and “leveraging” company information with other clients. “What goes on in the tent should stay in the tent,” he said.

Pick Up the Phone

Hecker also said his company, like many others, has experienced the inadvertent production of confidential or privileged materials in litigation.

“What do you expect of your lawyers” in this situation? Pera asked. “Everybody makes mistakes. Stuff happens.”

What bothers me most, Hecker said, is a lack of good communication. “If there's an inadvertent production, I want a phone call as soon as you know” so that the company can work effectively with outside counsel to “put a wall around it” and “mitigate the damage as best we can.”

Hecker said that on one occasion he didn't find out that his employer's confidential information had been produced by mistake until outside counsel filed a motion requesting return of the information after the opponent had refused to cooperate. While filing the motion may well have been the correct action, “I should have known about it in advance and been involved in the process,” Hecker said. “We will not be using that counsel again.”

Loyalty Over Ethics Rules

Simon said his determination of permissible conflicts is “driven more by a sense of loyalty and betrayal” than closely reading the ethics rules. “We're not holding up the books to see which conflicts rules apply. Loyalty is loyalty.”

While he and Hecker indicated they approve specific requests for conflicts waivers by outside counsel far more often than not, Simon drew a distinction between transactional conflicts and litigation conflicts.

“We understand that all of the global firms are involved in transactions. We don't have the same sense of loyalty in those situations,” he said. But “If you have represented us in litigation, you know how we think about problems. I am not sure I want a friend sitting on the other side” with that insight, he said.

Hecker commented, “The people who run our company are not lawyers and are not familiar with the code of legal ethics.” He urged firm lawyers to communicate with him in advance of taking on such representations—at least if they're interested in doing more business with Kiewit.

“When we see our counsel on an unrelated matter opposed to us,” and “our trusted adviser” is now “our hated enemy,” Hecker said, “how do I explain that that's OK to senior management?”

Hecker said if he doesn't know about the adverse representation in advance and therefore doesn't have the opportunity to “soften the blow,” the likely result is “even though the ethics rules may allow it, it will get you in the penalty box.”

To contact the reporter on this story: Helen Gunnarsson in Chicago at

To contact the editor responsible for this story: Kirk Swanson at


Request Corporate on Bloomberg Law