June 1, 2017
Lexis Practice Advisor Journal, Summer 2017 Edition
Disgorgement of legal fees is a harsh but not unusual penalty that courts typically impose on outside counsel as a remedy for breach of ethical obligations. In-house counsel are not completely shielded from this unforgiving sanction: recent cases from across the coasts are beginning to illustrate that it is not totally uncommon for courts to consider disgorgement as a sanction for in-house counsel’s ethical violations. This article discusses a closely-watched Washington Court of Appeals case that addressed whether in-house counsel violated his ethical duties when negotiating his compensation package with his corporate employer. The case is a reminder to the in-house counsel community that when wearing different hats as legal/business advisors and corporate employees, in-house counsel may need to pay special attention to the context and content of their interactions with their organizations, including making appropriate disclosures and obtaining written consents, advising their companies to consult separate counsel where necessary, and clarifying the nature, scope and implications of any employer-employee agreements they may enter into.