One Cure for Legal Headaches: The Advice of Outside Counsel
Sometimes your lawyer is too involved in whatever deal you're trying to swing, but outside counsel has no skin in the game and can tell you like it is.


“When we read about mayors, CEOs of major corporations and ministers of megachurches getting in conflict-of-interest financial or personal trouble, history has proven there is often a common denominator,” observes attorney Steven Kelly, a former prosecutor and associate commissioner at the New York City Department of Consumer and Worker Protection.
They probably failed to seek the advice of outside counsel. “From small, family-run businesses to massive corporations,” Kelly adds, “we repeatedly see the one theme that proves how beneficial it would have been to seek the advice of outside counsel and obtain clinically objective guidance that a good, truly independent attorney can provide.”
And why is outside counsel able to provide such objective advice? “Because he or she has not become intoxicated by the power that comes from being too close or dependent on the client for their job,” Kelly says. “We think of our attorney as a trusted adviser, someone who will not simply interpret or explain the law, draft contracts or other legal documents, but rather, who is familiar enough with you to understand what kind of activity or behavior not only poses a legal risk, but a reputational risk. You need a lawyer who can look you in the eye, no matter how powerful you are or what position you hold and tell you, ‘No, don’t do this.’”

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Outside counsel also has the advantage of their prospects not being tied to yours — giving you bad news doesn’t affect their livelihood. “An attorney who works in-house or within that inner circle of people who have worked alongside you historically and risen with you to that position of power may have their own career and wealth prospects tied to yours,” Kelly notes. “So, arguably improper, unethical or illegal activity may exist and will be overlooked due to an incentive to appease and agree. But outside counsel has no such incentive. They may risk losing you as a client, but they have other clients and, as representatives of their firm, understand that it isn’t just your reputation that is at risk, it’s theirs. This helps them provide much more clear-eyed, clinically objective advice.”

After attending Loyola University School of Law, H. Dennis Beaver joined California's Kern County District Attorney's Office, where he established a Consumer Fraud section. He is in the general practice of law and writes a syndicated newspaper column. "I love law for the reason that I can help people resolve their problems," he says. "I know it sounds corny, but I just love to be able to use my education and experience to help — simply to help. When a reader contacts me, it is a gift."
When the boss blames the in-house attorney
When things go south for an elected official, corporate executive or other powerful person, their worst enemy can be the in-house lawyer. For example, a mayor accused of abuse of his position for personal financial gain might say, “I ran this by my advisers, including some attorneys, and no one told me it was wrong.”
Kelly says that “inner circle” attorney is in a very difficult position: “That lawyer is of course bound by rules of professional conduct that prohibit disclosing communications with their client. What we are seeing now in New York City are advisers who surround the mayor — many who are attorneys themselves — trying to get ahead of the indictments and resulting scandal by resigning, or risking their own legal reputations and career prospects going forward. Additionally, because they are attorneys, they risk being brought up on violations by their state bar, facing a fine or losing their license. And when the lawyer is believed to be involved in the criminal activity, this may destroy the attorney-client privilege and open the door to damning evidence against the boss, as lawyers can defend themselves if accused of malpractice.”
A recommendation to seek the advice of outside counsel would be better, Kelly points out: “That lawyer would have been in a far better position if the employer were told, ‘I think it is best if you get a second opinion on this.’”
Advice to employees who know what the boss is doing is wrong
I asked Kelly what a caring employee should do — who should they speak to — when they know that the boss is doing bad stuff. He provided these approaches:
- Realize that silence is not an option. When you are aware of unethical, illegal or any type of inappropriate behavior being committed by the president, CEO, executive director or other higher-ups of an organization, you should not remain silent about it, regardless of where you are on the organizational chart.
- Does the organization have a reporting mechanism? Larger companies usually have guidance in their employee handbooks that says, “If you are aware of potentially inappropriate, unethical or illegal behavior or activity, these are the steps that you follow.” There may be a separate office within HR or the general counsel’s office with whom you can speak.
- Best practice is to not just rely on the reporting mechanism that exists within the organization, but to also memorialize the steps you took to report it. This can protect you from retaliation, because you can demonstrate that you reported some type of nefarious activity before they fired you or otherwise retaliated.
- If there is no such reporting mechanism, consult with an attorney and rely on the advice of counsel as to the next steps to take, such as reporting to a regulatory agency or, if you’re fired, bringing a wrongful termination suit.
Concluding our interview, Kelly cautions, “Eventually, (the questionable activity) will come out of the shadows,” putting your own reputation at risk.
Dennis Beaver practices law in Bakersfield, Calif., and welcomes comments and questions from readers, which may be faxed to (661) 323-7993, or e-mailed to Lagombeaver1@gmail.com. And be sure to visit dennisbeaver.com.
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After attending Loyola University School of Law, H. Dennis Beaver joined California's Kern County District Attorney's Office, where he established a Consumer Fraud section. He is in the general practice of law and writes a syndicated newspaper column, "You and the Law." Through his column, he offers readers in need of down-to-earth advice his help free of charge. "I know it sounds corny, but I just love to be able to use my education and experience to help, simply to help. When a reader contacts me, it is a gift."
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