Amicus Curiae Brief — Textron Inc. v. United States

Supreme Count, U.S.

FILED

JAN 27 2010

OFFICE OF THE CLERK |

TEXTRON INC. AND SUBSIDIARIES,

Petitioner,

Vv.

UNITED STATES OF AMERICA

Feespondent.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

BRIEF FOR AMICUS CURIAE

ASSOCIATION OF CORPORATE COUNSEL

IN SUPPORT OF PETITIONER

SUSAN HACKETT SETH P. WAXMAN

ASSOCIATION OF PAUL R.Q. WOLFSON

CORPORATE COUNSEL Counsel of Record

1025 Connecticut Ave., NW SHIVAPRASAD NAGARAJ

Washington, DC 20036 WILMER CUTLER PICKERING

(202) 293-4103 HALE AND DORR LLP

1875 Pennsylvania Ave., NW

Washington, DC 20006

(202) 663-6000

SO eS ———-- —_—__—-

QUESTION PRESENTED

Whether the work-product doctrine recognized in

Federal Rule of Civil Procedure 26(b)(3), which pro-

teets documents that are “prepared in anticipation of

litigation or for trial,” is limited to documents that are

prepared for use in litigation.

(1)

TABLE OF CONTENTS

Page

OU BOREL FRR ete Bee meserccnncocevoncnisenssetininsseansmenianeais j

Ee Ce Far ee ee tenicccenrecsstucincnnodessucsansaninanecs V

INTEREST OF AMICUS CURIAE.Loie.....2........000.cccceeess ]

INTRODUCTION AND SUMMARY OF AR-

PUP AIUIIE Th cosuccscuseneansnanandnadononapbetaceiial tetas Tits aid blest =

REASONS FOR GRANTING THE PETI-

BIE ccninresvtenttdaaiipaameminede eee BORA 3

I. Tue DECISION BELOW CONFLICTS WITH

THE WELL-ACCEPTED PRINCIPLE THAT

THE WORK-PRODUCT DOCTRINE APPLIES

To ANALYSIS 'THAT IS NECESSARY To DE-

LIVERING PREVENTIVE LEGAL ADVICE...........000000000

A. This Court And Other Courts Of Ap-

peals Have Extended The Work-

Product Doctrine To Analysis Of The

B. The First Circuit’s Decision In This

Case Departs From The Predominant

Understanding Of The Work-Product

CCN TOD vccitsaii cscs esiarenisannieeeaedeeaanaked 7

Il. THE FIRST CIRCUIT’S DECISION THREAT-

ENS CORPORATE GOVERNANCE EFFORTS ........--- ae

A. The First Circuit Ignored the Neces-

sity of Preventive Legal Advice In To-

GRY © CORDS UED WTI ccccsrnnsiesienicrceccerssincsnctiuares 10

(iii)

1V

TABLE OF CONTENTS—Continued

B. The First Circuit Failed To Under-

stand That The Work-Product Doc-

trine Is Crucial To Fostering Effective

SI Fen wcsctacinvhasnaccinncbaecsilaccnestniniernins 12

C. The First Circuit’s Decision Will Chill

The Lawyer’s Analytical Process, To

ERO COTAT S LIOCTEIIIOIE cc ccsccccscccvcsvecccsscccnsesesseeses 14

CONCLUSION ............. iiiesuntaiaddiclabeaueaioaienannnnlidnmnies 16

V

TABLE OF AUTHORITIES

CASES

Page(s)

Hickman v. Taylor, 329 U.S. 495 (1947)... 4,8, 12

In re Sealed Case, 146 F.3d 881 (D.C. Cir.

SUTIN siaveteaniesdadenieiinanackicadvainabibariiaesiminiemeiesmaial 6, 7, 11, 13, 15

United States v. Adiman, 134 F.3d 1194 (2d

Ii: IIIT sda cussasosischasisiagledesiseunendsaiauonanennanedabensaaabnantonian 6, 15

United States v. Roxrworthy, 457 F.3d 590 (6th

IN UII ssn leicdts ss cichincasieunaescenedesteeds qeeeidcomemeatensabaseaeiaaan 6

United States v. U.S. Gypsum Co., 438 U.S. 422

fo, RARER CRIE Betcha Aeterna RR Re Sea APR aE 11

Upjohn Co. v. United States, 449 U.S. 3838

III 5: cis daenelisslegdeal aaabesugaaiban ince Aeneas dk eluienaamaaianeiaee 5, 6

RULES

Federal Rule of Civil Procedure 26 ...........cccsccccseseecrersseenes i

OTHER AUTHORITIES

Chayes, Abram & Chayes, Antonia H., Corpo-

rate Counsel and the Elite Law Firm,

re Is Bats Rs ere Ci i incdincesdsicavsnctasceuentsonsncnescosines 5

Coffee, John C., Jr., The Attorney as Gate-

keeper, 103 Colum. L. Rev. 1293 (2003)................06 15

Coffee, John C., Jr., Understanding Enron,

ee ls ROE, See VID dete ca tavsnsecnnckcencsscensiavevnnscsccins 15

Duggin, Sarah Helene, The Pivotal Role of the

General Counsel in Promoting Corporate

v1

TABLE OF AUTHORITIES——Continued

Page(s)

Hazard, Geoffrey C., Jr., Ethical Dilemmas of

Corporate Counsel, 46 Emory LJ. 1011

PIII bad occsgucucdnsdiniicudasscaphasindanaiaidaanaiiadeaiiieamveinemninniies 14

Kaplow, Louis & Shavell, Stephen, Legal Ad-

vice About Information to Present in Liti-

gation, 102 Harv. L. Rev. 565 (1989) .........eeseseeees Ll

Kim, Susanna M., Dual Identities & Dueling

Obligations, 68 Tenn. L. Rev. 179 (2001)............... 13

Liggio, Carl D., Sr., A Look at the Role of Cor-

porate Counsel, 44 Ariz. L. Rev. 621 (2002)......... 4,5

2 Spahn, Thomas E., T’he Work Product Doc-

trine: A Practitioner’s Guide (2007) .......ccccccceecceeeees 10

IN THE

Supreme Court of the United States

No. 09-750

TEXTRON INC. AND SUBSIDIARIES,

Petitioner,

v.

UNITED STATES OF AMERICA,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

BRIEF FOR AMICUS CURIAE

ASSOCIATION OF CORPORATE COUNSEL

IN SUPPORT OF PETITIONER

INTEREST OF AMICUS CURIAE

The Association of Corporate Counsel is a bar asso-

ciation of over 25,000 “in-house” attorneys who practice

in the legal departments of more than 10,000 public, pri-

vate, and nonprofit corporations worldwide.’ The As-

No counsel for a party authored this brief in whole or in

part, and no person or party, other than amicus, its members, or

its counsel made a monetary contribution to the preparation or

submission of this brief. Counsel of record for all parties have con-

sented to the filing of this brief.

2

sociation is deeply interested in this case because it has

a strong interest in ensuring that its members are able

to provide their clients frank and thorough legal advice;

to be able to do so, attorneys must not be chilled from

thoroughly analyzing the legal problems faced by their

clients. ‘he Association offers the unique perspective

of in-house lawyers, who provide corporate legal coun-

seling to their clients on a daily basis across every in-

dustry and in-house practice setting.

INTRODUCTION AND SUMMARY OF ARG*IMENT

The petition for certiorari should be granted be-

cause the First Circuit’s decision is deeply flawed on

two grounds:

First, it derails the sensible development of the

work-product doctrine. This Court, the D.C. Circuit,

the Second Circuit, and other courts have recognized

that modern corporations constantly rely on their at-

torneys for preventive legal advice—that is, an evalua-

tion of the litigation and regulatory risks of business

decisions before they are undertaken. To provide this

advice, corporate attorneys must be able to collect facts

and analyze law without the fear that their work will be

later discoverable by adverse parties. These courts

have thus reasonably defined the work-product doc-

trine to cover the legal and factual analysis that sup-

ports preventive legal advice. The First Circuit’s con-

trary reasoning is inconsistent with the realities of the

modern business world.

Second, the First Circuit’s decision undermines im-

portant efforts by in-house and outside counsel to pro-

mote preventive compliance and important financial

accounting and disclosure functions necessary to assure

corporate responsibility, accountability, and transpar-

3

ency. Modern corporations are faced with countless le-

gal risks and pitfalls. Companies rely on their lawyers

both to help them comply with the law and to contrib-

ute analysis and understanding of the implications and

scope of legal risk, so that companies can take those

implications into account in the course of their daily

business decision-making and when assessing the com-

panies’ legal, financial, and disclosure obligations.

To be effective, legal risk assessment must be

based on thorough analysis. The work-product doctrine

gives attorneys the confidence to be as thorough and

candid as necessary. The First Circuit, however, dis-

counted the importance of the analysis that is essential

to delivering preventive legal advice and promoting ac-

curate preparation and planning, and therefore deemed

that analysis unworthy of the protections of the work-

product doctrine. That decision will chill corporate

lawyers from being as meticulous as they need to be,

and will deprive managers of the detailed legal assess-

ment that they need to make good decisions upon which

countless other stakeholders will rely. The decision will

therefore undermine efforts at improving corporate

compliance, transparency, and accountability.

REASONS FOR GRANTING THE PETITION

I. THE DECISION BELOW CONFLICTS WITH THE

WELL-ACCEPTED PRINCIPLE THAT THE WORK-

PRODUCT DOCTRIN® APPLIES TO ANALYSIS THAT IS

NECESSARY TO DELIVERING PREVENTIVE LEGAL AD-

VICE

This Court and other courts of appeals have prop-

erly recognized that the work-product doctrine should

not be confined to the narrow context where it was first

recognized (i.¢e., materials prepared for trial) but should

also apply when lawyers analyze the litigation risks of

4

proposed business transactions. Because the First Cir-

cuit rejects that reasoning, this Court’s review is war-

ranted.

A. This Court And Other Courts Of Appeals

Have Extended The Work-Product Doctrine

To Analysis Of The Litigation Risks Of

Business Transactions

The scope of work-product protection has evolved

significantly since the Court first articulated it in

Hickman v. Taylor, 329 U.S. 495 (1947)—as has the le-

gal system. In the 1940s, the volume of civil litigation

was much less than it is now, and criminal prosecution

of corporations was rare. Many corporations were

therefore fundamentally reactive in their approach to

litigation, hiring outside counsel to resolve legal prob-

lems after they had arisen, rather than seeking preven-

tive advice to avoid problems before they arose or as-

sess the litigation risks of business decisions. See Lig-

gio, Sr., A Look at the Role of Corporate Counsel,

44 Ariz. L. Rev. 621, 623 (2002). The work-product doc-

trine announced in Hickman understandably reflected

those circumstances, and that case involved materials

created “in the course of preparation for possible litiga-

tion after a claim has arisen.” 329 U.S. at 497.

Hickman itself recognized, however, that work-

product protections would not be static. Because the

work-product doctrine is an instrument of “public pol-

icy,” driven by “the interests of the clients,” 329 U.S. at

510, 511, it must reflect the “background of custom and

practice,” id. at 518 (Jackson, J., concurring). And in

the decades following Hickman, there was a dramatic

change in the “custom and practice” of how corpora-

tions managed their litigation risks. Beginning in the

1960s, there was a burst of civil litigation, much of it

5

involving corporations. Liggio, swpra, at 624. Simulta-

neously, Congress created several administrative agen-

cies, each with its own enabling statutes, implementing

regulations, and enforcement authority. Jd. The SEC,

the IRS, and the Justice Department also significantly

expanded their investigation of and enforcement

against questionable actions by corporations. See Dug-

gin, The Pivotal Role of the General Counsel in Pro-

moting Corporate Integrity and Professional Respon-

sibility, 51 St. Louis U. L.J. 989, 1011 (2007).

In response, corporations necessarily began to take

a more proactive approach to litigation through preven-

tive counseling. Before initiating any important trans-

action, corporations now ask their attorneys for advice

about the legal risks involved. Chayes & Chayes, Cor-

porate Counsel and the Elite Law Firm, 37 Stan. L.

Rev. 277, 283 (1985). Counsel can provide such advice

only after thoroughly investigating the facts and can-

didly analyzing the lega! issues. This process enables

companies to structure their business decisions to avoid

future litigation by focusing on how to avoid legal prob-

lems (or minimize risk) in the first place.

The Court acknowledged this change by extending

the work-product doctrine to the legal and factual

analysis that serves as the basis for preventive legal

advice. In Upjohn Co. v. United States, the Court rec-

ognized the need to protect the confidentiality of notes

and memoranda prepared by Upjohn’s corporate coun-

sel during an internal investigation of questionable

payments made by foreign subsidiaries. 449 U.S. 383,

401 (1981). As the Court noted, these materials were

intended to “supply a basis for legal advice concerning

compliance with securities and tax laws, foreign laws,

currency regulations, duties to shareholders, and po-

tential litigation in each of these areas.” Id. at 394

6

(emphasis added). The Court appreciated that corpora-

tions must plan their conduct around legal risks: “[i]n

light of the vast and complicated array of regulatory

legislation confronting the modern corporation, corpo-

rations, unlike most individuals, constantly go to law-

yers to find out how to obey the law.” 7d. at 392 (inter-

nal quotation marks omitted). The Court therefore

granted protection to “the valuable efforts of corporate

counsel” that would lead to sound preventive advice

and “ensure their client’s compliance with the law.” /d.

The courts of appeals—especially the Second and

D.C. Circuits—followed this Court’s lead. The Second

Circuit held that the work-product doctrine covers

documents that are “created because of the prospect of

litigation, analyzing the likely outcome of that litiga-

tion.” United States v. Adlman, 134 F.3d 1194, 1202 (2d

Cir. 1998). As it explained, corporations will often ask

counsel for legal memoranda on “whether to undertake

[a] transaction and, if so, how to proceed with the trans-

action.” /d. at 1199. The work done to prepare such

advice falls “squarely” within work-product protections

because it “candidly discusses the attorney’s litigation

strategies, appraisal of likelihood of success, and per-

haps the feasibility of reasonable settlement.” /d. at

1200; see also United States v. Roxworthy, 457 F.3d

590, 600 (6th Cir. 2006) (adopting Ad/man).

Likewise, the D.C. Circuit held that the work-

product doctrine applies to analysis intended “to pro-

tect the client from future litigation about a particular

transaction.” In re Sealed Case, 146 F.3d 881, 885 (D.C.

Cir. 1998). A “contrary ruling” would “undermine” a

“particularly critical stage of a legal representation”

because “[i]t is often prior to the emergence of specific

claims that lawyers are best equipped either to help cli-

7

ents avoid litigation or to strengthen available defenses

should litigation occur.” Id. at 886.

B. The First Circuit’s Decision In This Case De-

parts From The Predominant Understanding

Of The Work-Product Doctrine

The courts that have extended work-product pro-

tections to the analysis supporting preventive legal ad-

vice have correctly understood that [/ickman was a

fundamentally pragmatic decision: it rested on “public

policy” concerns, and the scope of the privilege it rec-

ognized was bound to change as the legal system

changed. In stark contrast, the First Circuit’s under-

standing of Hickman adopted in the decision below is

wooden and formalistic. It does not take account of the

evolving nature of legal work-product in modern corpo-

rate counseling and in assessing legal risk as that risk

in turn affects the company’s financial posture.

The decision below went astray by focusing on

Hickman’s facts rather than its reasoning. The First

Circuit believed that Hickman was about “the materi-

als that lawyers typically prepare for the purpose of

litigating cases,” such as “memoranda recording wit-

ness interviews ..., draft briefs, [and] outlines of cross-

examination.” Pet. App. 10a. Because the First Circuit

framed Hickman so narrowly, it viewed the work-

product doctrine as protecting only the “lawyer who

tries cases.” /d. at 15a, 17a. Under that cramped view,

it concluded that the doctrine applies only to “materials

prepared for use in litigation.” /d. at 15a. The court

found irrelevant the ubiquitous modern corporate prac-

tice of preventive legal analysis, because (the court be-

heved) an “experienced litigator” would never consider

such materials deserving of privilege. See 2d. at 17a,

19a.

8

Whatever might have been true in the 1940s, the

First Circuit’s view is disconnected from the realities of

the modern legal system and lawyers’ increasingly im-

portant role in advising companies regarding the legal

risks and complexities of every aspect of corporate de-

cision-making, ranging from daily operations to periodic

financial disclosure to major transactions. As this

Court and other courts of appeals have rightly con-

cluded, the animating rationale of Hickman is no longer

strictly limited to trial-preparation materials. Today,

litigation is an ever-present fact of life permeating al-

most every business decision made in corporations, and

it would be rash for any company not to consider litiga-

tion risks in its business planning. If work-product pro-

tections are to be adequate to serve important concerns

of “public policy” and the “interests of the clients,”

Hickman, 329 U.S. at 510, 511, then they should extend

to analysis of the litigation risks of planned business

decisions. Because the First Circuit’s flawed applica-

tion of //ickman is so deeply at odds with the approach

taken by other courts, this Court’s review is warranted.

Ul. THE FIRST CrirmculT’s DECISION ‘'THREATENS

CORPORATE GOVERNANCE EFFORTS

The First Circuit’s legal error, if allowed to stand,

will lead to a significant problem of public policy: the

decision will undermine diligent efforts by those seek-

ing to promote better corporate responsibility, trans-

parency, and accountability. Corporations in this coun-

try of every kind vitally depend on preventive legal ad-

vice and accurate risk assessment. By seeking and ob-

taining advice on the risks of litigation or corporate li-

ability exposure, corporations can police themselves,

comply with the law, and avoid (or at least prepare to

defend against) litigation. By providing corporate lea-

9

ders with accurate and candid evaluations of litigation

risk, corporate counsel can assist corporations in im-

proving their performance in innumerable ways, such

as setting accurate litigation reserves, understanding

and complying with disclosure obligations, and assess-

ing the implications of possible tax positions. In short,

preventive legal advice is essential to fostering good

corporate behavior and responsible financial decisions

and reporting.

But corporations will not receive effective and can-

did preventive legal advice, nor will they be able to ac-

curately assess the risks of their business decisions,

unless corporate managers can be assured that their

attorneys can undertake thorough legal analysis with-

out worry that their own work product will be used

against the company’s interests in the future. Herein

lies the fundamental flaw in the First Circuit’s reason-

ing: it fails to recognize that, if lawyers are to serve

their clients effectively, both the clients and the law

yers must not have reason to fear that the lawyers’

analysis will become “Exhibit A” for their potential ad-

versaries. By raising that prospect, the First Circuit’s

decision will discourage clients from seeking ovt and

including corporate lawyers in their daily work and will

deter corporate lawyers from preparing and providing

thorough preventive legal advice, all of which will leave

companies less informed than they should be about the

legal risks of business decisions. The inevitable result

will be a reduction in effective self-policing and a rise in

mismanaged transactions, with litigation inevitably fol-

lowing. No attorney should be considering how to limit

his legal advice to counter this dilemma, and no com-

pany (nor its stakeholders) should suffer the conse-

quences of this chilled relationship—especially since

10

improved corporate governance is one of the central

public-policy objectives of the day.”

A. The First Circuit Ignored the Necessity of

Preventive Legal Advice In Today’s Corpo-

rate World

The First Circuit attached no importance to pre-

ventive legal advice. Such advice, however, is indis-

pensable in the modern business world.

Unlike indivic.uals, corporations are constantly ex-

posed to a wide range of litigation and regulatory risk.

Even operational decisions made on a daily basis by

small companies—e.g., marketing, sales or purchases,

employment policies, workplace-safety—could carry

entity-threatening potential legal risks if blithely taken.

And complex decisions taken by the largest compa-

nies—é.g., mergers and acquisitions, stock or bond issu-

ances, regulatory compliance (including tax treatment

advice), entry inte foreign markets—come with im-

mense legal complications. When these transactions

are mishandled, companies can face government inves-

tigations, civil and criminal penalties, and private law-

suits. These complexities are often amplified by legal

* The attorney-client privilege is not sufficient to protect pre-

ventive legal analysis. Although the attorney-client privilege and

the work-product doctrine sometimes overlap, the two are not

substitutes. The work-product doctrine “actually differs dramati-

cally from the [attorney-client] privilege in nearly every respect.”

2 Spahn, The Work Product Doctrine: A Practitioner’s Guide § 8.1,

at 423 (2007). The attorney-client privilege protects communica-

tions between attorneys and clients, but the legal and factual

analysis that supports preventive advice will often derive from a

lawyer’s own thinking (and not his communications). The attor-

ney-client privilege is thus of limited benefit in this context.

11

uncertainty, because it may be unclear whether a cer-

tain course is legal or questionable, whether an action

taken will raise new legal concerns post hoc, or whether

subsequent developments will unfold and affect the

wisdom of the approach taken in unanticipated ways.

As this Court has noted, for instance, antitrust viola

tions are “often difficult to distinguish from the gray

zone of socially acceptable and economically justifiable

business conduct.” United States v. U.S. Gypsum Co.,

438 U.S. 422, 440-441 (1978).

Because corporate managers act against this gray

background, they must anticipate and plan to avoid liti-

gation risks for practically every important decision

they make. A deal might implicate antitrust or securi-

ties laws, a new technology might involve copyright or

patent issues, an employment policy could have unin-

tended impacts on a protected class, a new product

might lead to tort liability—all of which could lead to

costly litigation. See In re Sealed Case, 146 F.3d at 886.

To aceount for such contingencies, it is essential for

corporate managers to understand all the risks, so that

they can make a well-informed decision to stop, con-

tinue, or alter a planned transaction.

The public-policy benefits of preventive legal ad-

vice and accurate financial risk assessment are substan-

tial. They help companies follow the law, serve the

stakeholders who rely on the accuracy of companies’

financial reporting when making their own decisions in

reliance on the company’s business integrity, and pro-

mote accountability and responsibility in corporate

governance. As scholars have generally observed, “le-

gal advice provided when individuals are deciding how

to act will tend to be socially beneficial” because it leads

them “to behave desirably.” Kaplow & Shavell, Legal

Advice About Information to Present in Litigation,

12

102 Harv. L. Rev. 565, 597 (1989). This will be espe-

cially true in the corporate context, since preventive

legal advice will help companies to defuse potentially

serious legal consequences. Such self-policing will

surely pay broad dividends across the system: the com-

pany will avoid (or be better enabled to address) litiga-

tion; its shareholders will not suffer a diminution in the

value of their investments; the government will not

have to launch investigations or focus on expensive re-

medial actions; and employees and the general public

will be spared the devastating and far-reaching impact

of more corporate scandals.

B. The First Circuit Failed To Understand That

The Work-Product Doctrine Is Crucial To

Fostering Effective Preventive Advice

To provide effective preventive legal advice, corpo-

rate lawyers must be able to undertake investigations

that uncover all the facts and to conduct analysis that

diagnoses all the legal risks. Contrary to the First Cir-

cuit’s reasoning, the protection of that process is the

proper province of the work-product doctrine.

As this Court has observed, to provide effective

service to a client, a lawyer must be able to “assemble

information, sift what he considers to be the relevant

from the irrelevant facts, prepare his legal theories and

plan his strategy without undue and needless interfer-

ence.” Hickman, 329 U.S. at 510-511. Hence, the

work-product protections recognized by this Court

guard against the “[iJnefficiency, unfairness and sharp

practices” that would otherwise “inevitably develop in

the giving of legal advice.” Jd. at 511.

Companies that employ or retain lawyers to advise

them about the litigation risks of planned business de-

cisions need work-product protections if their lawyers’

13

advice is to be thorough and candid. Indeed, the need

may be even greater in that context than in the trial

setting because preventive lawyering presents unique

challenges. There is usually no lawsuit to frame the

preventive inquiry and no discovery to guide the fac-

tual investigation. Instead, when a company asks its

attorney for preventive advice, the lawyer must piece

together the necessary facts, laws, and issues from

scratch, often under severe time and business pressure.

To do this well, the lawyer needs complete confidence

that he can prepare thorough analysis without jeopard-

izing his client’s interests—in particular, he needs to be

sure that his work will not later end up in the hands of

an adverse party who could potentially use the analysis

against his client. On the other hand, when a lawyer

fears that his work product will not be protected, he

will “not likely risk” being entirely candid and compre-

hensive, “thus severely limiting [his] ability to advise

clients effectively.” Jn re Sealed Case, 146 F.3d at 886.

These protections are particularly important to the

work carried out by in-house attorneys, who are obli-

gated as corporate gatekeepers to provide preventive

legal advice. In-house attorneys are particularly well

positioned to help their companies comply with the law.

They are “intimately familiar” with the company’s op-

erations. Kim, Dual Identities & Dueling Obligations,

68 Tenn. L. Rev. 179, 199-200 (2001). Unlike outside

counsel, who often are hired only after a crisis erupts,

in-house lawyers tend to be involved in every stage of a

company’s decision-making process, as well as a wider

range of transactions, many of which outside counsel

never see or might not understand as fully because

they are not integrated in the company’s daily proc-

esses. See Duggin, supra, at 1006-1019. Equally impor-

tant, in-house attorneys usuaily have a trusted rela-

14

tionship with corporate managers inside the company

and a regular place at the table when business decisions

are being made. They have access not only to informa-

tion transmitted through formal channels (such as

board meetings) but also to “informal, back-channel in-

formation that flows around the company water

cooler.” Hazard, Jr., Ethical Dilemmas of Corporate

Counsel, 46 Emory L.J. 1011, 1019 (1997). Thus, when

they provide preventive legal advice, in-house attor-

neys can bring to bear their full institutional expertise

and knowledge. But if their work product will be dis-

coverable, such thoroughness will not be in the com-

pany’s best interests in terms of limiting risk or liabil-

iby.

C. The First Circuit’s Decision Will Chill The

Lawyer's Analytical Process, To The Client’s

Detriment

In the D.C. and Second Circuits, when corporate

attorneys prepare preventive legal advice, they can be

sure that their work product will not be discoverable.

So unfettered, they can conduct comprehensive analy-

sis, knowing that candid assessment of their client’s

risks aligns with the client’s best interests. As a result,

their clients will receive the optimal level of advice.

In the First Circuit, the calculus will be very dif

ferent, for corporate lawyers will be chilled from being

as thorough as necessary and from reducing their can-

did assessments to writing. Each time the lawyer con-

siders writing a legal memorandum or jotting down

notes from a factual investigation, he will have to de

termine whether doing so could damage the company’s

interests in discovery. This will discourage any reason-

able lawyer from “engaging in the writing, note-taking,

and communications so critical to effective legal think-

15

ing.” In re Sealed Case, 146 F.3d at 886-887. And that

perverse incentive will plainly disadvantage the client

by diminishing its ability to make an informed decision

and increasing its exposure to litigation. Deterring

lawyers from reducing their thought processes and

analysis to writing virtually ensures that the advice ul-

timately given to the client will not be as thorough as it

should be. As the D.C. and Second Circuits have ob-

served, if a company “secrimps on candor and complete-

ness to avoid prejudicing its litigation prospects, it sub-

jects itself ... to ill-informed decisionmaking,” and will

“inevitably reduce voluntary compliance with the law

[and] produce more litigation.” Adlman, 134 F.3d at

1200; In re Sealed Case, 146 F.3d at 887.

* + *

The damaging effects from the decision below could

not come at a worse time. Ever since the fall of Enron

and subsequent significant corporate failures, the gov-

ernment and the business community have made a con

certed effort to focus on improved corporate legal com-

pliance and to prevent future scandals and devastating

losses. The lesson learned from many of these debacles

was a need to prevent future “gatekeeper failure.” Cof-

fee, Jr., Understanding Enron, 57 Bus. Law. 1403

(2002). That is, the forces in the system that were em-

powered to curb or prevent corporate excess (including

lawyers, accountants, and independent directors) failed

to do so. Accordingly, Congress, the SEC, and profes

sional associations have tried to reinvigorate gatekeep-

ing functions. In particular, the “spotlight is now fo-

cused on lawyers.” Coffee, Jr., The Attorney as Gate-

keeper, 103 Colum. L. Rev. 1293, 1293 (2003). Indeed,

under the Sarbanes-Oxley Act, both Congress and the

SEC are increasingly counting on attorneys to steer

corporations to legal compliance. Duggin, szpra, at

16

1033. In this new environment, courts should support

lawyers performing this important role with all the

tools they need to fulfill it. Because the First Circuit’s

decision does precisely the opposite, this Court should

grant review.

CONCLUSION

The petition for a writ of certiorari should be

pranted.

Respectfully submitted.

SUSAN HACKETT! SETH P. WAXMAN

ASSOCIATION OF PAUL R.Q. WOLFSON

CORPORATE COUNSEL Counsel of Record

1025 Connecticut Ave.,. NW SHIVAPRASAD NAGARA

Washington, DC 20036 WILMER CUTLER PICKERING

(202) 293-4103 HALE AND DORR LLP

1875 Pennsylvania Ave., NW

Washington, DC 20006

(202) 668-6000

FANUARY 2010