If inside lawyers are perceived as less objective than outside counsel, a questionable proposition, their value shrivels

In a comment to a Ben Heineman blog post last week about how compliance officers should co-report to the general counsel and the chief financial officer, one person raised yet again the fundamental criticism that in-house lawyers, beholden for their jobs, lack independence and objectivity as compared to law firm partners. The context more specifically was when the Board of Directors wants trustworthy legal counsel.

“Many Boards are themselves asking for counsel from lawyers outside of the company. They are perhaps influenced by the big law firms who profit from the kind of duplication in expertise that you [Heineman] rightly deplore, as much as by concern about their particular CEOs. But a Board’s logic of seeking to find advisers who do not depend on the CEO is inescapable in the real world.”

Inescapable logic for this writer is that Board members don’t trust employed lawyers as much as retained lawyers. It is a pernicious mistrust but who can arbitrate? Is there a premium for external honesty? Outside counsel have conservatism, profit motives, blind spots, and agendas too. Inside lawyers, you could counter-argue, care more about getting the right answer because their job, their workload in coming years, and their stock options depend on wise advice.

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