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17 October, 2008  
The lawyer as whistleblowing confidant

Law firms offer clients the best available cone of silence. It’s expensive, but the service also blocks out sight and smell. It’s even fireproof

imagePeople who want to successfully commit complex fraud, etc. turn to secrecy services markets.

These markets are crammed full of professionals, banks and countries proffering their wares.

Secrecy is not just a minor adjunct to the service being offered. It is the principal service being sold.

As John Christensen, Director of the Tax Justice Network, said (in relation to tax havens) on Four Corners, Oct. 6:

“I haven’t found any legitimate way in which they [tax havens] earn their incomes other than through providing secrecy services to external clients. That is the essential service they provide.”

For fraudsters, the “legal professional privilege” product has long been the best on offer, although it tends to be the most expensive.

It offers wide coverage to clients, including (and exclusively so) quite a lot of immunity from being questioned by pesky people, such as judges.

Successful lawyers and their clients commit a great deal of crime in lawyers’ offices.

Routine criminal activities include aiding and abetting perjury, being accessories after the fact, concealing serious offences, influencing witnesses, conspiring to pervert the course of justice, money laundering and assisting clients to commit fraud.

Fortunately, successful lawyers run the legal system. Great care is taken to steer the law around law firms, instead of into them, but accidents are bound to happen, which is why legal professional privilege was invented.

Successful lawyering without the privilege is impossible. US law professor Geoffrey Hazard wrote in 1978 that:

“The attorney-client privilege may well be the pivotal element of the modern American lawyer’s professional functions”.

imageAs Lord Denning said in Attorney-General v Mulholland (1963):

“The only profession that I know which is given the privilege from disclosing information to a court of law is the legal profession.”

The privilege creates a cone of silence, which smothers the sound of all crashes. The lawyers’ version eliminates sight and smell as well.

The “fraud exception” to legal professional privilege bans lawyers from doing bad stuff while hiding under their cone of silence/invisibility/smell.

The legal profession argues that this exception is so effective at deterring illegal behaviour that there have been no reported cases in Australia of lawyers committing fraud while inside the cone.

Well, perhaps there’s been a little bit of smoke occasionally, but no fire.

By the way, the lawyers’ cone is fireproof too.

John Pierpont Morgan (1837-1913) gave Elbert Henry Gary (an Illinois lawyer) the job of running the United States Steel Corp.

Like all successful lawyers, Gary knew which side his bread was buttered. In 1927 he gave an interview to Time Magazine:

“Mr. Morgan was interested in the Elgin, Joliet & Eastern Railway, known as the Outer Belt Line of Chicago … I saw instantly that his plan would not work. ‘You can’t do that under the law,’ I explained.

‘I don’t hire lawyers to tell me what I can’t do,’ was Mr. Morgan’s [famed] report. ‘I hire them to tell me how to do what I want them to do’...

[From this, some have drawn the unwarranted inference] that he was willing to do an illegal thing if a way could be found to do it; safely. But such,’ said Judge Gary, ‘was never the case’.”

In the private sector, the lawyers who are spreading butter on their bread the most thickly (i.e. senior partners) have to use employees (who may be being paid in unbuttered crusts) to assist in legally smelly work.

imageSee pic: senior partner on top, law firm employee below, client further down.

Incidentally, if the partner’s grip slips, then the partner will be out of there like a shot, despite previous promises such as, “we all work as a team here at Sue Grabbit & Run”.

The lawyers’ cone of silence beats all others hands down.

It is such a saleable product that out-house lawyers (they control the profession) have always been reluctant to share it with in-house lawyers, and the squabble is hotting up a bit, as in-house lawyer numbers increase.

On April 2, The Sydney Morning Herald reported:

“Traditional law firms are losing senior staff in droves to in-house jobs with big corporations. Over the past 20-years, the number of in-house lawyers has grown more than fivefold – from seven per cent of the profession to more than 17 per cent.”

On August 25 Rosalind Croucher of the Australian Law Reform Commission gave a speech entitled The ALRC’s Report on Client Legal Privilege – implications for lawyers in the public sector. She said:

“In-house counsel have every reason to feel a little nervous or unsure at the moment, their status as equal with external lawyers having been called into question both on the domestic and international fronts.”

She makes it clear that threatened reduction in status (for in-house lawyers) revolves around whether they can offer “privilege” to their employers, and she sets out case law that argues that being an employee of the client prevents in-house lawyers from being independent, and if they are not independent, they shouldn’t be able to offer privilege.

Secrecy services buyers need to also factor in the whistleblowing risk factor.

In-house lawyers might get caught up in whistleblowing laws, if current mutterings on the subject in Australia lead to anything.

The government has a very narrow agenda here and it does not include encouraging whistleblowing in the private sector.

When a distinguished academic (Prof. Thomas Faunce, ANU) recently pointed this out to the relevant committee (in the face of some quite persistent opposition) he was eventually told:

“Do not rule out the possibility that there will be some subsequent examination of whistleblowing in the private sector.”

As yet there is no “encouraging of whistleblowing” in the Legal Profession Bill before Parliament, and between you and me, I doubt whether there ever will be.

Back in 2000 the NSW Law Reform Commission reported:

“Neither the [NSW] Law Society nor the Bar Association favoured the extension of whistleblowing principles to the legal profession.”

imageIn June 2007 Rosalind gave one of the two presentations at a LawAsia conference. She said:

“The theme for this LawAsia session, ‘Legal Professional Privilege – Whistleblower or confidante?’, reflects a balancing exercise … ‘Whistleblowing’ suggests, in Australianese, ‘dobbing’ ... ‘Confidante’, on the other hand, suggests an entirely different notion of confidential communication.”

The whistleblowing confidante? That’s one hell of a balancing act. If it really can be done, it would put Blondin’s exploits (seen here) to shame.