Dark clouds loomed over in-house counsel throughout 2008 as the list of their potential liabilities surged in mass and intensity. Although the whirlwind of activity surrounding the backdating of stock options seemingly subsided, albeit temporarily, via case dismissals and settlements,[FOOTNOTE 1] lightning bolts struck in the form of claims against in-house counsel involving bribery, fraud, conspiracy, insider trading, violations of securities laws, failures to disclose, e-discovery errors, defamation via electronic media, violations of attorney-client privilege in the whistleblower context, failure to monitor, regulatory and investigative issues inclusive of Sarbanes-Oxley[FOOTNOTE 2] and the Foreign Corrupt Practices Act[FOOTNOTE 3] (FCPA), and breaches of fiduciary duties. Punishments for these wrongful acts included termination, community service, disbarment, disgorgement, fines and penalties, and incarceration.

In view of this mix of existing and new exposures confronting in-house attorneys, this article highlights the current business and legal environment most germane to in-house practitioners, provides a random sample of atypical real-life claims, and discusses protections sought by those practicing in-house. To date a handful of general counsels have been targeted for investigations, named as defendants in legal actions, or both. It is likely, however, that we will see more legal and enforcement activity in 2009.

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