Miranda Warnings for Lawyers? Recent Rulings Highlight the Possibility

[WSJ_law_blog]

Miranda warnings for lawyers? Some think we’re heading in that direction — requiring lawyers to be hyper-explicit when telling individuals during corporate investigations that they represent the company, not necessarily the individual.

The issue has come up recently in two separate high-profile instances. Earlier this month, Los Angeles federal district court judge Cormac Carney — who just might be the only federal judge to have ever played in the old United States Football League — threw out portion’s of the government’s criminal stock-options backdating case against a former Broadcom executive after ruling that lawyers from Irell & Manella failed to explain clearly to the executive that it was representing the company, not the executive.

A similar issue recently arose during the government investigation of R. Allen Stanford. The Justice Department filed criminal obstruction-of-justice charges against Stanford’s chief investment officer, Laura Pendergest-Holt, based on statements she made in sworn testimony to the SEC. Present during the testimony was Proskauer Rose lawyer Thomas Sjoblom, who said during the testimony he represented Stanford and officers and directors of his affiliated companies.

But Pendergest-Holt says in her suit that she believed he represented her personally. Click here for Monday’s story on the issue, from the WSJ’s Kara Scannell. Click here for the LB take on the Pendergest-Holt suit.

In the Broadcom situation, a spokesman for Irell & Manella, Charles Sipkins, called the judge’s ruling an “error” and said all of the law firm’s disclosures were proper. The government is appealing the ruling, which suppresses all statements to the firm by former Broadcom Chief Financial Officer William Ruehle.

In any event, the decision is reverberating among law firms. Lawyers say it already is widespread practice to give some kind of notice in contacts with employees that the lawyer represents the company or its board of directors, not the employee. The Broadcom ruling is likely to make that warning even more precise.

“We’re going to see the interview warnings turn into something akin to the Miranda warning the police give to suspects,” said Steve Crimmons, a former Securities and Exchange Commission lawyer now at Mayer Brown.

“These cases highlight for lawyers the importance of navigating carefully the minefield of conflicts in this area,” added Bruce Yannett, a partner with Debevoise & Plimpton.