Attorney Independence
Attorney independence is usually not an issue for attorneys in private practice representing clients in traditional litigation or transaction practice, unless the attorney is in business with the client, or becomes a participant in the client’s wrongdoing. There is no protection if the court determines that the attorney–client relationship was a sham to conceal illegal activities involving the attorney. There has already been one case in which medical care attorneys were indicted, along with their clients, for materially participating in the clients’ alleged scheme to defraud the federal government. The physicians were accused of taking kickbacks to steer nursing home patients needing hospital care to hospitals that paid the physicians’ bribes. These bribes were in the form of consulting fees pursuant to contractual agreements drawn up by counsel. The allegation was that the attorneys knew that these deals were illegal. This would mean that there would be no privilege between the accused attorneys and their clients.
Most questions about attorney independence involve in-house counsel. If the attorney is found to be acting as an administrator, rather than an attorney, there will be no privilege. The first step to preserving privilege for in-house attorneys is to ensure that they are licensed in the jurisdiction where they are giving advice. While there are circumstances were privilege might attach when the attorney is not properly licensed and not under the close supervision of a licensed attorney, these are unusual and would not apply to an in- house counsel who was not closely supervised as part of a legal department.
The possession of a license is not enough, however; the attorney also must be free to exercise independent legal judgment. The free exercise of independent judgment is a distinguishing characteristic of a professional. Whether it is certifying a bridge as sound, diagnosing an illness, or giving a legal opinion, only the person holding the appropriate license can legally make the professional decision. A corporation cannot hold a professional license; neither can an unlicensed individual practice a profession by employing a license holder to ratify the layman’s decisions. These strictures apply equally to physicians and attorneys, although the nature of professional judgment is easier to define for physicians. Since hospitals constantly deal with the issue of independent judgment with regard to physicians’ services, this situation will be used to illustrate the principle of free judgment.
The medical situation that is closest to the role of in-house counsel is that of a company physician. Despite the often-held belief that physicians cannot be employed by nonphysicians, most large corporations employ physicians to treat employment- related illnesses and manage employee health programs. The physician is employed to provide services as defined by the employer. The employer may tell the physician how many hours to spend seeing patients, or not to see patients at all. These are administrative decisions. The employer cannot tell the physician how to treat the patients that the physician does see. When seeing patients, the physician is exercising medical judgment, an area that the employer cannot infringe upon. In the same way, an attorney cannot let a nonattorney client dictate his or her decision making. To do so would be legal malpractice, and would forfeit privilege.
To preserve this independence, the head of a legal department, or, if there is just one in-house attorney, that attorney, must report to the CEO or to the board, rather than to a lower-level administrator. The attorney must be acting as an attorney, not just as an administrator with a law license.