Brief Fact Summary. In the aftermath of the early ’90s savings and loan scandal, law firm Jones, Day, Reavis & Pogue was alleged to have condoned-and possibly even assisted in-an ongoing cover-up of serious regulatory violations committed by Lincoln.
Synopsis of Rule of Law. The court considers a summary judgment motion brought by Jones Day to dismiss the claims brought against them.
Issue. This case presented the following major issues:
To whom does corporate counsel’s fiduciary duty primarily extend?
When does corporate counsel’s knowledge of possible regulatory violations and/or deficiencies overcome the duty of confidentiality and trigger the obligation to withdraw representation?
Is an attorney acting as an “expert” for purposes of Section 11 when he issues an opinion letter advising a client as to an SEC registration statement?
Held. Jones Day’s motion for summary judgment was denied.
An attorney’s highest fiduciary duty is to the corporate client itself, not to its directors, officers, and other affiliates.
An attorney has the duty to raise concerns about possible regulatory violations with the client, and to withdraw representation if the client insists on continuing with them. An attorney may not continue representation when it is apparent that such representation may be a “substantial factor” in allowing such violations to continue.
An attorney providing an opinion letter used in connection with an SEC registration statement is acting as an “expert” for the purposes of Section 11.
In a legal malpractice action, the client has the burden of establishing three elements: (1) employment of the defendant attorney, (2) failure of the attorney to exercise ordinary care, skill and diligence, and (3) that such negligence was the proximate cause of damage to the plaintiff.View Full Point of Law