Any ethics and privilege analysis starts with properly identifying the client. In the corporate context, some law firms (and even in-house lawyers) accidentally create a joint attorney-client relationship with both their corporate client and an executive, by not warning the executive that they represent the company and not him or her. However, a law firm intentionally representing both a corporation and an executive might face a nightmarish situation that such a “corporate Miranda warning” cannot cure.
In United States v. Nicholas, No. SACR 08-00139-CJC, 2009 U.S. Dist. LEXIS 29810, at *2 (C.D. Cal. Apr. 1, 2009), the well‑known law firm of Irell & Manella undertook what the court called “three separate, but inextricably related, representations” of Broadcom and its CFO. Irell represented Broadcom in connection with the company’s internal investigation of stock option issues, and the CFO in two lawsuits brought by shareholders alleging wrongdoing in connection with stock options. Irell interviewed the CFO, and then disclosed information it learned during the interview to the U.S. Attorney’s Office, the SEC, and Broadcom’s auditor. When the government pursued criminal charges against the CFO, he sought to suppress the statements he had made to Irell during the interview, and the court granted his motion. Among other things, the court noted that Irell had not advised the CFO before the interview that the firm was wearing only its “Broadcom” hat during the interview, and that it might disclose to third parties what it learned from the CFO. The court explained that “whether an Upjohn warning was or was not given is irrelevant” — because the firm clearly represented the CFO. Id. at *19. As the court put it, “[a]n oral warning to a current client that no attorney‑client relationship exists is nonsensical at best – and unethical at worst.” Id. at *20. In addition to suppressing the evidence, the court referred Irell to the State Bar for “appropriate discipline” based on the firm’s ethical misconduct that “[t]he Court simply cannot overlook.” Id. at *4.
Under the court’s analysis, Irell could never have ethically represented the CFO once it became clear that the CFO’s interests were adverse to Broadcom’s interests. Irell compounded the error by failing to properly identify the client who controlled the privilege protecting the firm’s interview with the CFO.