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Four Ways Companies Should React When GCs Behave Badly

By Michele Gorman  Originally Published in Law360, February 8, 2018

–Additional reporting by Carolina Bolado and Melissa Daniels. Editing by Emily Kokoll.

As employers across industries scrutinize their policies and workers’ complaints in the wake of the Harvey Weinstein sexual assault scandal, a legal department may wonder what actions to take when its own general counsel breaches fiduciary duties or engages in misconduct.

Longtime American Red Cross General Counsel David Meltzer, for example, resigned from the non-profit last week after a ProPublica report detailed allegations that he mishandled a sexual misconduct case involving another senior official at the organization in 2012.

Also in January, James Patrick Stanton, the general counsel for Florida company MaintenX Management Inc., agreed to disbarment after he was accused of secretly videotaping female employees who were using the restrooms and shower areas on the premises of the maintenance and repair company, allegedly between February 2010 and June 2010. His decision awaits approval from the Florida Supreme Court.

Experts say these scenarios are common, and can prove difficult for employers to handle because of a GC’s typical authority over legally sensitive investigations and access to confidential information. Especially with the social media focus on the subject, it’s increasingly risky for organizations to hide or shy away from addressing these issues.

“In general, especially with the #MeToo movement and others, the environment has really changed, where people feel empowered to speak about the things that have either happened to them or that they have witnessed,” Danielle Hagen, senior vice president of strategic communications and public relations firm Nahigian Strategies LLC, told Law360.

Experts identified four steps a business can take if its top lawyer is suspected of egregious behavior.

Establish an Acceptable Culture

After the most recent wave of #MeToo complaints, Nadine Abrahams, co-leader of Jackson Lewis PC’s employment litigation practice group, said she continues to recommend employers promptly establish a culture devoid of harassment starting with high-level managers — even before a possible situation arises. Reaffirming a belief in a harassment-free workplace in a demonstrable way is key. An executive outside of the human resources department, for example, could email the staff to reiterate the company’s commitment to equal employment and transparency.

“If that comes from the top to establish that the company will take it seriously, that would hopefully prevent individuals from feeling like they can’t come forward if there is someone like the GC or another executive who is the bad actor,” Abrahams told Law360.

Whether it’s a hotline, cellphone app or other outlet for employees to confidentially voice concerns, businesses should ensure staff members have multiple known reporting structures available, including one that allows them to file complaints with someone who works outside of the legal department.

A lot of companies have policies that aren’t effective, Abrahams said. Employees should feel “that the door is actually physically open or that they can go to [managers] and they won’t be stymied in their complaint.”

Above all, employees need to feel reassured that they are working in a safe environment because they’re a company’s best asset.

Act Immediately

A general counsel acting egregiously is similar to any C-suite member who violates company policy, experts say. If an upper-level manager is involved — either because he or she is the alleged harasser or mishandled complaints — the employer needs to begin a prompt investigation into the accusations.

Organizations need to demonstrate that there isn’t C-level immunity. Through company training, employers can reassure their staff that high-ranking members of the company — including members of the legal department — are subject to the same codes of conduct and legal obligations as workers in non-managerial jobs, said Gail Gottehrer, an Akerman LLPpartner whose practice includes labor and employment litigation with a focus on the impact of technology on business and the workplace.

Hagen suggested being prompt in both internal and external communications because the longer it takes for a company to respond, the more likely a business’ reputation will be damaged. She also stressed the value of involving the communications director in any conversations, because that person presumably understands how to disseminate messages to maintain trust with staff members and the public.

Meanwhile, experts warn companies to look at how they are assessing an incident. Before hastily moving forward, the business first needs to gather all relevant information.

“Organizations really need to be focused on getting the facts, doing their due diligence, but also addressing the problem head on,” Hagen said.

Hire a Neutral Party

The employer should consider removing the issue from the legal department’s realm and giving it to someone with authority over the general counsel, typically the CEO or the board of directors, said Robin Shea, a partner at Constangy Brooks Smith & Prophete LLP whose practice includes employment litigation.

Some experts went further by suggesting companies hire an external human resources professional or attorney who doesn’t have a standing relationship with the legal department to design, lead and conduct the investigation. Those people, Shea said, can also advise the business on how to protect the confidentiality of alleged victims and witnesses and minimize the risk of retaliation by the general counsel.

“In most cases, this would involve suspending the GC with pay while the investigation takes place, and blocking his or her access to the company’s systems and physical premises until the investigation is over,” she said.

Having a neutral third party can be useful, similar to when Uber last year hired Covington & Burling LLP’s Eric Holder and Tammy Albarrán to review its policies and procedures, just one day after ex-Uber engineer Susan Fowler posted a blog alleging systemic harassment and discrimination at the transportation network company.

Uber’s board of directors unanimously approved Holder and Albarrán’s resulting recommendations, a list broken into sections spanning senior leadership changes and better human resources practices, and publicly issued their report.

Learn From the Situation

If the investigation proves the general counsel violated policy or engaged in unlawful activity, the CEO and board in consultation with outside counsel will want to take action to hold that person accountable and demonstrate that such conduct will not be tolerated, employment lawyers say.

Gottehrer suggested GCs be held to a higher standard, since their responsibility is to ensure organizations and employees follow the law.

In the aftermath, the company may need to enhance the availability of its staff who receive complaints or establish a new committee altogether, said Ann Marie Painter, a partner in Perkins Coie LLP’s labor and employment practice.

If a misconduct case does arise with the general counsel, the company may need to determine whether other employees in the legal department were complicit in the chief legal officer’s actions. But one circumstance doesn’t necessarily mean the issue is systemic.

Leslie K. Eason, a Gordon Rees Scully Mansukhani LLP partner whose practice involves employment law, encourages managers to take time to regroup, retrain staff and invest in their employees to inhibit similar behavior in the future.

“Use events like these,” she said, “to improve culture and become even better.”

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