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12-2003

Long-Term Employment Agreements With In-House Counsel: Employment Security or Ethical Quagmire?

Richard E. Moberly University of Nebraska, [email protected]

John Hutchins McKenna Long & Aldridge LLP

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Moberly, Richard E. and Hutchins, John, "Long-Term Employment Agreements With In-House Counsel: Employment Security or Ethical Quagmire?" (2003). College of Law, Faculty Publications. 34. https://digitalcommons.unl.edu/lawfacpub/34

This Article is brought to you for free and open access by the Law, College of at DigitalCommons@University of Nebraska - Lincoln. It has been accepted for inclusion in College of Law, Faculty Publications by an authorized administrator of DigitalCommons@University of Nebraska - Lincoln. Published in GEORGIA BAR JOURNAL 9:3 (December 2003), pp. 20-29. Copyright 2003 State Bar of Georgia.

Employment Agreements Long-Term Employment Agreements With By Richard Moberly and John Hutchins In-House Counsel: Employment Security or Ethical Quagmire?

he relationship between a company and its in-house corporate counsel

involves a fragile mixture of the corporate counsel’s fiduciary obligations T as the company’s attorney and the company’s legal and contractual respon- sibilities as the attorney’s employer. Although these roles and expectations often blend

smoothly, the relationship can become problematic when the corporate counsel’s posi-

tion as an attorney conflicts with the counsel’s status as an employee. Put another way,

when a company’s expectations as a client are at odds with its responsibilities as an

employer, the relationship between the employer-client and the employee-attorney can

become strained and expose each to difficulty, if not liability. One situation that may breed such tension occurs when an in-house attorney enters into a long-term employment contract with an employer-client. In a typical attorney- client relationship between a company and its outside counsel, the client may terminate its relationship with its attorney at any point.1 The attorney would be entitled to quan- tum meruit, or payment for services rendered, but the attorney would not be entitled to payment for loss of future fees, even if the client already agreed to such payment.2 In this situation, the law gives priority to the client’s right as the beneficiary of a fiduciary relationship with its attorney to terminate the relationship (the client’s “beneficiary rights”). A long-term employment contract with a corporate or in-house counsel, however, involves subtle, but important, differences. Depending on how such a contract is struc- tured and the current state of the law in the jurisdiction at issue, in-house counsel may have an argument that the contract obligates the client to a continued employment rela- tionship, even if the client desires to terminate the attorney-client relationship. If true, this would infringe upon the client’s ability to terminate its relationship with its attorney immediately (or without future consequence). Enforcing this type of contract would implicitly value an attorney’s contractual rights more than a client’s beneficiary rights. Thus, when an in-house counsel enters into a long-term employment contract with a client, a tension is created between the client’s beneficiary rights and the attorney’s con- tractual rights. This article addresses two issues that may arise as a result of this tension.

20 Georgia Bar Journal First, it is unresolved in Georgia action against a former employer is however, that standard can be dif- whether long-term employment entirely dependent upon whether ficult to apply, particularly in the contracts are enforceable by in- this type of contract is enforceable. context of an attorney taking the house counsel through a breach of Second, if a general counsel is offensive against a client based contract action. In Georgia, permitted to bring a breach of con- upon a breach of contract claim. “express contracts between attor- tract action against an employer- Unfortunately, neither of these ney and client as to compensation client, the limits on the attorney’s issues is resolved easily under cur- are generally recognized.”3 At the ability to use the client’s own confi- rent Georgia law, which should be same time, it is also the state’s pub- dential information against the unsettling to Georgia’s in-house lic policy that “a client has the client in that litigation are some- counsel and their clients alike. absolute right to discharge the what murky. This issue has been attorney and terminate the relation hotly debated in other jurisdictions THE ENFORCE- at any time, even without cause.”4 in the context of wrongful dis- ABILITY OF A At the intersection of these two charge claims, but the issues are competing forces are long-term relevant even in a breach of con- LONG-TERM employment contracts for in-house tract action. Georgia’s Rule of EMPLOYMENT counsel. For example, a long-term Professional Conduct 1.6 provides contract that provides for a signifi- some guidance, in that it only per- CONTRACT FOR cant severance benefit should the mits an attorney to reveal a client’s GEORGIA’S IN- employment be terminated prema- confidential information if the turely may arguably limit the abili- attorney reasonably believes it is HOUSE COUNSEL ty of a corporation to terminate the necessary “to establish a claim or Two seminal Georgia cases dom- attorney’s employment. Whether a defense on behalf of the lawyer in a inate the issue of the enforceability discharged in-house attorney may controversy between the lawyer of a long-term employment con- succeed in a breach of contract and the client.”5 In application, tract between a company and its in- company was bound by the general ed when an attorney represents a house counsel: Henson v. American counsel’s contractual rights.14 client.”20 6 Family Corp. and AFLAC, Inc. v. AFLAC, Inc. v. Williams: Yet, despite this apparent rejec- Williams.7 These cases, however, tion of Henson’s reasoning, the reach differing conclusions regard- The Client Has the AFLAC Court distinguished ing the balance between a compa- Absolute Right to Fire Henson, without expressly overrul- ny’s beneficiary rights as a client Its Attorney ing it, by basing its decision on the and an attorney’s contractual rights invalidity of the AFLAC contract’s The public policy apparently as an employee. damages provision, a type of provi- hidden from the Henson Court was sion which the Court noted was not Henson v. American identified a decade later by the involved in Henson.21 Moreover, Georgia Supreme Court in AFLAC, Family Corp.: the Court specifically stated that it Inc. v. Williams.15 In AFLAC, the Contracts Should Be was not addressing the employ- Court held that a long-term retainer Enforced ment relationship between employ- contract for an outside counsel was ers and in-house counsel, as that In 1984, the Georgia Court of unenforceable because it contained issue was not before the Court.22 Appeals determined that a dis- a penalty clause if the client prema- Therefore, the AFLAC Court’s judi- charged general counsel could turely terminated the contract.16 cial restraint left unresolved what bring a breach of contract action Under the contract in AFLAC, the effect, if any, its emphasis on a against his former employer under company paid an outside counsel a client’s right to terminate its attor- a long-term retainer contract.8 In monthly retainer under a seven- ney without consequence has on Henson, a company and its general year contract; however, if the com- Henson’s contrary holding. In short, counsel executed a ten-year pany terminated the contract early, AFLAC may cause Georgia’s in- employment contract, “subject to even for good cause, it agreed to house counsel to wonder whether removal by action of the board [of pay “as damages an amount equal their long-term employment con- directors] at any time it shall be to 50 percent of the sums due under tracts are enforceable. deemed necessary.”9 Six years the remaining terms, plus renewal later, the board removed the gener- of this agreement.”17 The Conflict Between a al counsel.10 As part of litigation The Court relied upon important Client’s Beneficiary resulting from the termination, the public policies underlying the Rights and an general counsel filed a breach of attorney-client relationship to Attorney’s Contractual contract claim to obtain the fee for determine that such a contract was the remainder of his contract.11 unenforceable.18 Specifically, the Rights In permitting the action to go for- Court held that this contract was At its core, the conflict between ward, the Court of Appeals rejected void as against public policy, Henson and AFLAC is a conflict the company’s argument that such because “[r]equiring a client to pay between which value to uphold: a a long-term retainer contract is damages for terminating its attor- client’s unfettered right to fire its against public policy. Relying on a ney’s employment contract eviscer- attorney or an employee’s right to 1922 Georgia Supreme Court case, ates the client’s absolute right to rely on his or her contract. The pol- the Court of Appeals stated that terminate. A client should not be icy arguments supporting each express contracts between an attor- deterred from exercising his or her value are compelling. ney and client are generally recog- legal right because of economic The Georgia Supreme Court’s 19 nized, even if the contemplated coercion.” The Court consciously articulation of the theoretical 12 services are not rendered. The chose to uphold the client’s benefi- underpinning of its holding in Henson Court stated that it was ciary rights to the detriment of the AFLAC with regard to outside aware of no public policy preclud- attorney’s contractual rights: “To counsel applies equally to in-house ing the enforcement of such con- force all attorney-client agreements counsel. The “relationship between 13 tracts. Therefore, although the into the conventional status of a lawyer and client is a special one board of directors was permitted to commercial contracts ignores the of trust that entitles the client to the remove the general counsel, the special fiduciary relationship creat- attorney’s fidelity.”23 In fact, the

22 Georgia Bar Journal

“unique” relationship between a Courts across the country, including client and its attorney, whether outside counsel or in-house, is Georgia, have reached different conclusions “founded in principle upon the ele- ments of trust and confidence on and assessments regarding which inherent the part of the client and of undi- vided loyalty and devotion on the value to uphold: the beneficiary rights of an part of the attorney.”24 Therefore, it would seem logical that a client employer-client or the contractual rights of must be free to end the relationship with its in-house counsel whenever an employee-attorney. it “ceases to have absolute confi- untenable position of having to rely sel’s legal advice to organizational dence in either the integrity or the on outside counsel that knows less goals.35 Moreover, the Court judgment or the capacity of the about the [the company-client] than asserted that the general rule per- 25 attorney.” does the party suing it.”30 mitting a client to fire an attorney Courts in other jurisdictions Thus, according to this line of for any reason or for no reason have expressly applied these policy reasoning, the right to terminate does not apply in every case, and it rationales to in-house counsel and the relationship is an implied term particularly does not always apply prohibited breach of contract and of every employment contract “without consequence.”36 other actions between companies between an attorney and client.31 Another California court permit- 26 and their in-house counsel. These As the Georgia Supreme Court ted a breach of contract action courts note that permitting an held in AFLAC, “[a] client’s dis- because it recognized that the attorney to bring a breach of con- charge of his attorney ‘is not a employment relationship between tract action after being fired would breach of the contract of employ- a company and its in-house counsel intrude not only upon the right to ment but the exercise of his had aspects that may override the fire one’s attorney, but also upon right.’”32 After AFLAC, clients in client’s right to terminate its attor- the entire fiduciary relationship of Georgia may assert that this rea- ney: for example, the in-house trust that is the cornerstone of the soning should extend to in-house attorney “was a salaried employee, attorney-client relationship.27 counsel as well. required to work exclusively for the Indeed, permitting an in-house By contrast, in permitting breach employer. The employer had the counsel to sue a client raises unique of contract actions by in-house sole discretion to determine the problems. For example, qualifying counsel, courts in other jurisdic- employee’s duties and to supervise the right of a client to fire its attor- tions have relied upon the inherent such duties.”37 Simply because the ney by subjecting the client to differences between an in-house attorney also owed ethical obliga- potential liability for that firing lawyer and outside counsel, as well tions toward his employer, asserted “would have a chilling effect upon as the value of upholding the right the court, does not require that the the ability of a client to exercise the to contract.33 In the seminal case attorney lose all contractual rights right to discharge as the cost of espousing this point of view, as an employee. Therefore, the exercising that right could be litiga- General Dynamics Corp. v. Superior attorney should be paid upon dis- 28 tion with the former attorney.” Court,34 the California Supreme charge in accordance with the attor- Such litigation is more threatening Court enumerated several policy ney’s contract.38 Similarly, another than typical litigation because the reasons to permit in-house counsel court upheld an in-house attorney’s attorney has had unique access to to bring a breach of contract claim breach of contract claim and stated the client’s confidential information against a former employer-client. that “an employee status as an as a fiduciary and has an awareness For example, an in-house counsel is attorney cannot excuse an employ- of the client’s strategies and economically dependent upon the er’s violation of its contractual or resources that would be protected employer-client and also under statutory obligations. Attorneys from any other plaintiff by the unique and powerful organization- may be unpopular, but they are not 29 attorney-client privilege. In short, al pressures to conform the coun- yet fair game.”39 These courts, then, employer-clients “will be put in the

24 Georgia Bar Journal echoed the type of reasoning used (a) A lawyer shall maintain in con- At certain times, Rule 1.6 per- by the Georgia Court of Appeals in fidence all information gained mits an attorney to disclose infor- Henson by declaring that a compa- in the professional relationship mation “the attorney reasonably ny could fire its in-house attorney if with a client, including infor- believes necessary,” including it was dissatisfied, but that the mation . . . the disclosure of when necessary “to establish a attorney did not lose the contractu- which would be embarrassing claim or defense.”41 Comment 17 al right to payment for the remain- or would likely be detrimental to Rule 1.6 states that when a der of the contract.40 to the client . . . . lawyer uses confidential informa- In summary, courts across the (b) (1) A lawyer may reveal infor- tion to establish a claim or defense, country, including Georgia, have mation covered by paragraph the lawyer “must make every effort reached different conclusions and (a) which the lawyer reasonably practicable to avoid unnecessary assessments regarding which inher- believes necessary: disclosure of information relating ent value to uphold: the beneficiary . . . to a representation, to limit disclo- rights of an employer-client or the (iii) to establish a claim or sure to those having the need to contractual rights of an employee- defense on behalf of the lawyer know it, and to obtain protective attorney. Yet the battle for suprema- in a controversy between the orders or make other arrangements cy between these important values lawyer and the client . . . . minimizing the risk of disclosure.” does not fully consider another (e) The duty of confidentiality shall The problem in litigation, of aspect of these disputes that should, continue after the client-lawyer course, is where to draw the line but only occasionally does, play a relationship has terminated. between permissible and imper- role in a court’s analysis. The comments to Rule 1.6 clarify missible disclosure. Once a dis- Specifically, the danger of revealing some of these requirements. For pute has reached the litigation attorney-client confidences during example, Comment 5 confirms that stage, it may involve a “no-holds- the course of a dispute between a this rule applies to “all information barred” confrontation in which client and an in-house attorney is related to the representation, what- neither party can be trusted to vol- significant. Regardless of which side ever its source,” not merely to mat- untarily maintain the lofty pre- of the dispute a court supports, both ters communicated in confidence cepts embodied by the Rules of the parties and the court should be by the client. In other words, more Professional Conduct. In other cognizant that the true danger of than just the attorney-client privi- words, whether information is these disputes lies in their potential- lege is protected — any of the “reasonably necessary” to assert a ly destabilizing effect on the essence client’s information learned by the claim or defense may be in the eye of the attorney-client relationship: attorney during his or her role as of the beholder. Is the client confi- the attorney’s ethical obligation to attorney is protected from disclo- dence technically required to maintain client confidences. sure, whether or not the informa- prove an element of the breach of tion also is a “privileged” commu- contract claim or does it merely AN IN-HOUSE nication. provide the factual background of COUNSEL’S USE OF CLIENT CONFI- DENCES IN LITI- GATION AGAINST THE CLIENT In Georgia, the boundaries of an attorney’s ability to use client con- fidences in a dispute with a former client are set by Rule 1.6 of the Rules of Professional Conduct. Rule 1.6 provides that:

December 2003 25 the employee’s dismissal? For the issue of whether to permit in- General Dynamics) that in-house example, if an attorney is dis- house counsel to sue a client for counsel ought to be treated differ- charged “for cause” related to job breach of contract in the first place. ently because their position has duties as an attorney under a long- As a result of considering the limited mobility and marketability. term employment contract, then impact of an attorney’s obligation “Maybe so. But it is not clear to us should the attorney be permitted not to reveal confidential informa- that these circumstances, which to disclose purportedly confiden- tion, some courts present a com- may or may not be present in a par- tial information to explain that a promise solution between the ticular case, entitle in-house coun- “for cause” firing was not justi- “contract rights” emphasis in sel to consideration different from fied? If this is permissible, then Henson and the “beneficiary rights” that of private attorneys. It can be how does a court evaluate a case emphasis in AFLAC. These courts argued with equal plausibility that in which an attorney claims he or permit breach of contract actions many of those in private practice, she was fired for conduct related by in-house counsel, but restrict who remain subject to the quantum to a confidential situation but the such claims to situations in which meruit rule, are confronted also employer claims the discharge the claim is related to the attorney’s with problems of mobility and was for reasons not related to any relationship with the company as marketability.”48 Thus, the confidential situation? The an employee, rather than as an Nordling Court was willing to employer would argue the attor- attorney.42 As long as the claim can uphold contractual rights to some ney does not need to use confiden- be brought “without violence to extent, but not at the expense of a tial information to prove the the integrity of the attorney-client client’s beneficiary rights. untruth of the employer’s accusa- relationship,” a breach of contract Similarly, in Kiser v. Naperville tions, but the attorney will assert action will be permitted by these Community Unit,49 a court in the that it is necessary to reveal the courts.43 Northern District of Illinois upheld confidential information in order For example, in Nordling v. the right of an in-house attorney to to present the entire picture of the Northern States Power Co.,44 the bring a breach of contract action relationship. Even more problem- Minnesota Supreme Court permit- because the client fired the attorney atic, this argument likely will be ted a breach of implied contract before the end of his contract and made “after the fact.” The attorney claim by an in-house counsel who cited “cost effectiveness” as its may not wait to get a ruling from was fired without the employer fol- rationale.50 The client attempted to the court regarding the use of the lowing the progressive disciplinary argue that it had the absolute right to client’s information, but may sim- steps required by the employee fire its attorney, but the court reject- ply include the information in a handbook.45 According to the ed that argument.51 Stating that the complaint. Court in that case, such an action “right” asserted by the client to fire These questions are not easily was permitted because the firing its attorney was merely a “general” resolved and present a dilemma was not related to the employee’s — as opposed to an “absolute” — that lies beneath every dispute role as an attorney; rather, it was “a right, the court permitted the breach between a client and its attorney, case of deteriorating personal rela- of contract claim to go forward particularly when that attorney is tions between an employee and his because (1) the reason for the termi- an in-house lawyer who has access supervisor.”46 Seemingly recogniz- nation was not related to the attor- to a broader swath of confidential ing the line between the two more- ney-client relationship; (2) the defen- information than a typical outside extreme viewpoints discussed dant company did not argue that lit- attorney who is retained for a spe- above, the Court hinted that its igating the attorney’s claim would cific matter. Although no Georgia holding would be different in a force disclosure of confidential com- appellate court has addressed in a case in which the in-house attor- munications or that allowing such reported opinion the scope of an ney’s discharge was the result of a claims generally would affect client in-house attorney’s obligation to dispute that implicated company trust or attorney autonomy; and (3) it maintain the confidentiality of confidences or secrets confided to appeared that the attorney’s role was client information in a dispute with the attorney.47 In so doing, the much broader than simply being an a client, other courts have analyzed Court rejected the attorney’s argu- attorney — he had administrative this problem as integrally related to ment (apparently based upon duties to perform as well.52 Thus, the

26 Georgia Bar Journal Kiser court attempted to balance the disclosing sensitive information to A-AA-AA two competing interests: “A client their in-house attorneys if they are ATTORNEY REFERRAL SERVICE may lose trust in and terminate his concerned about it later being used attorney for reasons that are wholly against them. Is your phone ringing like it unrelated to the attorney’s perform- used to? Last month we ance and therefore insufficient to PREEMPTIVE referred over 17,000 callers to constitute ‘cause’ under the contract. our attorneys. Are you ready to STEPS EACH start getting referrals? Post-termination breach of contract Call us today! damages are generally unavailable PARTY CAN TAKE to the terminated attorney in such a TO PROTECT THEIR (800) 733-55342 case, because a client must be free to 24-hhour paging: fire an attorney he does not trust.”53 INTERESTS WITHIN (888) 669-44345 Moreover, as noted above, the fact THE CONTEXT OF that the dispute did not implicate NEW HOME attorney-client confidences made the A FIDUCIARY CONSTRUCTION court more willing to consider the attorney’s claims. RELATIONSHIP COMPLAINTS Indeed, even the General Until the Georgia Supreme Court Residential Construction Dynamics Court held that a claim resolves the uncertainties faced by & Development Expert by an employee-attorney should corporations and their in-house • Code & Inspection only be brought if it can be done counsel as a result of the conflicting Compliance without revealing any client confi- holdings of Henson and AFLAC, • Cost/Quality Analysis 54 • Materials & Labor dences. Thus, the seminal case both parties have options they can Evaluation undermining the client’s utilize to bargain ex ante for a con- 770-922-4411 “absolute” right to fire its attorney tractual resolution that provides [email protected] recognized that the fiduciary rela- protection to the attorney’s need for tionship between the employer- financial security and the client’s Counseling for Attorneys client and the employee-attorney desire to protect its confidential demanded different treatment than information. Although it may seem Depression the typical employment dispute. odd to resolve a dispute about Anxiety/Stress Therefore, the unique access of whether a contract is enforceable Life Transitions in-house counsel to a client’s confi- by proposing a contractual solu- Career Concerns dential information may require tion, one must remember that the Divorce/Separation Relationship Conflicts different treatment of claims by tensions created by the fiduciary such attorneys against their obligations of an in-house attorney Elizabeth Mehlman, J.D., Ph.D. employer-clients. Even if a court with a long-term employment Clinical Psychologist takes a middle ground between agreement are whether the client’s (404) 874-0937 Midtown Atlanta Henson’s contractual rights focus right to fire its attorney has been and AFLAC’s beneficiary rights infringed and whether the client’s emphasis and permits limited confidences are at risk. The sugges- breach of contract claims by in- tions below do not undermine REMINDER house counsel, courts will have to these rights; rather, they reinforce consider the possibility that such lit- them by providing up-front protec- The Annual igation may reveal a client’s confi- tions to both parties. Fiction Writing dential information. Revealing such First, to protect client confi- information in litigation potentially dences, any employment agree- Competition could undermine the attorney- ment between a company and its in- client relationship between a com- house counsel should have a provi- Deadline is pany and its in-house counsel, sion requiring the attorney, in any Jan. 23, 2004. because companies may be wary of lawsuit the attorney brings against

December 2003 27 the company, to seek a protective than use a long-term contract to ment law consulting and complex order upon initiating the litigation, protect the in-house counsel, the commercial litigation. He repre- prior to disclosing any client infor- agreement could provide for a sents employers in disputes involv- mation, permitting both parties to signing bonus and a limited notice ing ADA and FLSA issues, employ- file their pleadings under seal. period before the contract can be ment discrimination, workplace harassment, ERISA and the Family Although this procedure may be terminated early. A court examin- and Medical Leave Act. He also met with resistance by the media in ing a short notice period might per- has extensive experience in litigat- highly publicized cases, it should be ceive that such a provision does not ing restrictive covenant and trade noted that this exact procedure is unnecessarily burden the client’s secret disputes in the employment recommended by Comment 17 to right to terminate its attorney in the context. Rule 1.6 of the Rules of Professional same manner that paying the attor- Conduct, which suggests that a ney’s salary for the remaining John Hutchins is a lawyer who seeks to utilize a client’s years on a long-term contract partner at McKenna confidences against the client in liti- might burden the client.56 Long & Aldridge LLP. gation “make every effort practica- He has served as lead ble” to limit the disclosure, and “to CONCLUSION trial counsel in jury tri- als in federal and state obtain protective orders or make An in-house attorney is an courts and has handled a wide other arrangements” to minimize employee and, to some degree, range of cases in courts in the risk of disclosure. The absolute deserves to have contractual pro- Georgia, New York, Pennsylvania, obligation of this contractual com- tections afforded other employees. Virginia, Missouri, Massachusetts, mitment should supplement the pli- A company is a client of its in- California and Wyoming. Hutchins able language of Rule 1.6, which house counsel and deserves to focuses his practice on technology permits disclosure of confidential have the right to terminate its rela- issues and has substantial experi- information if the attorney deems it tionship with its attorney without ence litigating employment-relat- “reasonably necessary,” and only suffering drastic financial conse- ed disputes involving technology recommends the use of protective quences or facing the public expo- companies. He is a frequent orders if “practicable.” A contractu- sure of its confidential information. author and speaker on legal issues al provision making a protective Balancing the rights and responsi- confronting technology compa- order mandatory would eliminate bilities of these complex and, at nies and currently serves as litiga- tion committee chair of the Bar’s the dangerous possibility of confi- times, conflicting roles can be diffi- Technology Section. dential information being revealed cult, particularly when courts improperly. refuse to recognize the dual-roles Endnotes Second, in-house counsel should of each party and attempt to char- 1. See Dorsey v. Edge, 75 Ga. App. attempt to receive financial securi- acterize the relationship as solely 388, 392, 43 S.E.2d 425, 428 (1947). ty up-front as a signing bonus employee-employer (as in Henson) 2. See Myszka v. Henson & Henson, rather than rely upon a tenuous or attorney-client (as in AFLAC). P.C., 170 Ga. App. 878, 879, 318 S.E.2d 672, 673 (1984). contractual commitment for a spe- Until the Georgia Supreme Court 3. Henson v. Am. Family Corp., 171 cific number of years of employ- resolves the Henson-AFLAC Ga. App. 724, 728, 321 S.E.2d 205, ment. Such up-front payments will dichotomy, companies and their 210 (1984) (quoting Pickens Co. v. Thomas, 152 Ga. 648, 652, 111 S.E. most likely be deemed to be a “gen- in-house counsel should work 27, 29 (1922)) (internal quotation eral” retainer, which the attorney together to resolve these issues marks omitted). will be able to keep even if the con- before a dispute arises. 4. AFLAC, Inc. v. Williams, 264 Ga. tractual commitment is not ful- 351, 353, 444 S.E.2d 314, 316 (1994) (quoting White v. Aiken, 197 Ga. filled.55 Moreover, a signing bonus Richard Moberly is an 29, 32, 28 S.E.2d 263, 265 (1943)) may be appealing to a client if the associate with (internal quotation marks omitted). attorney is willing to give up a con- McKenna Long & 5. Georgia Rules of Prof. Conduct, tractual measure of damages Aldridge LLP in Rule 1.6(b)(1)(iii). 6. 171 Ga. App. 724, 321 S.E.2d 205 should the client terminate the con- Atlanta. Moberly’s practice focuses on (1984). tract before the end of the con- 7. 264 Ga. 351, 444 S.E.2d 314 (1994). employment litigation, employ- tract’s term. For example, rather 8. See Henson, 171 Ga. App. at 728,

28 Georgia Bar Journal 321 S.E.2d at 209-10. The contract & Shein v. Glantz, 53 N.Y.2d 553, (rejecting argument that client had in Henson makes clear that the 556, 428 N.E.2d 387, 389, 444 absolute right to discharge attor- attorney was the company’s “gen- N.Y.S.2d 55, 57 (1981) (internal ney-employee); Slifkin v. Condec eral counsel” and was considered quotation marks omitted). Corp., 13 Conn. App. 538, 549, 538 under the contract to be a full-time 25. Id. (quoting Fracasse v. Brent, 6 A.2d 231, 236 (1988) (permitting employee of the company; howev- Cal.3d 784, 790, 494 P.2d 9, 13, 100 breach of contract action by in- er, the arrangement also recog- Cal. Rptr. 385, 389 (1972) (quoting house attorney against employer); nized that the attorney would Gage v. Atwater, 136 Cal. 170, 172, Klages v. Sperry Corp., No. 83- receive a long-term retainer and 68 P. 581, 582 (1902))) (internal 3295, 1986 WL 7636, *3-5 (E.D. Pa. would retain some independence quotation marks omitted). July 8, 1986) (same). through an outside practice. Id. at 26. See, e.g., Anastos v. Chicago Reg. 34. 7 Cal 4th 1164, 876 P.2d 487, 32 726, 321 S.E.2d at 208. Therefore, it Trucking Assoc., Inc., 250 Ill. Cal.Rptr.2d 1 (Cal. 1994). appears that the attorney’s posi- App.3d 300, 302-303, 618 N.E.2d 35. Id. at 1172, 876 P.2d at 491-92, 32 tion had both outside counsel 1049, 1051, 188 Ill. Dec. 479, 481 Cal.Rptr.2d at 5-6. independence as well as the on- (1993) (rejecting a breach of con- 36. Id. at 1174-75, 876 P.2d at 493, 32 going responsibilities and commit- tract claim by a former general Cal.Rptr.2d at 7 (emphases added). ment of a typical in-house counsel. counsel based upon a ten-year 37. Chyten, 23 Cal. App. 4th at 613, 46 Regardless, in-house counsel in employment agreement); Cohen v. Cal. Rptr.2d at 463. Georgia will certainly rely on its Radio-Electronics Officers Union, 38. Id. at 614, 46 Cal. Rptr.2d at 464. holding to support claims regard- 146 N.J. 140, 154, 679 A.2d 1188, 39. Golightly-Howell v. Oil, Chem. & ing the enforceability of their 1196 (1992) (refusing to award con- Atomic Workers Intern’l Union, employment agreements. tractual damages to in-house attor- 806 F. Supp. 921, 924 (D. Colo. 9. Id. at 727, 321 S.E.2d at 209. ney when client discharged attor- 1992). 10. Id. ney without giving contractually 40. Henson, 171 Ga. App. at 728, 321 11. Id. at 724, S.E.2d at 207. required notice of six months). S.E.2d at 210. 12. Id. at 728, 321 S.E.2d at 210 (quoting 27. See Anastos, 250 Ill. App. 2d at 301- 41. Rule 1.6(b)(1)(iii) of Georgia Rules Pickens Co. v. Thomas, 152 Ga. 02, 618 N.E.2d at 1050; Cohen, 146 of Prof. Conduct. 648, 652, 111 S.E. 27, 29 (1922)) N.J. at 155-57, 679 A. 2d at 1195-97. 42. See, e.g., Kiser v. Naperville (internal quotation marks omitted). 28. Anastos, 250 Ill. App.2d at 302, 618 Community Unit, 227 F. Supp. 2d 13. Id. N.E.2d at 1051. 954, 965-66 (N.D. Ill. 2002); 14. Id. 29. See Santa Clara County Counsel Golightly-Howell, 806 F. Supp. at 15. 264 Ga. 351, 352-53, 444 S.E.2d 314, Attorneys Assoc. v. Woodside, 7 924; Nordling v. Northern States 315-16 (1994). Cal. 4th 525, 559, 869 P.2d 1142, Power Co., 478 N.W.2d 498, 501- 16. See 264 Ga. at 353-54, 444 S.E2d at 1162, 28 Cal.Rptr.2d 617, 637 (1994) 502 (Minn. 1991). 317. (Panelli, J., dissenting) (noting that 43. Nordling, 478 N.W.2d at 502. 17. Id. at 352, 444 S.E.2d at 316. an in-house counsel’s “insider’s 44. 478 N.W.2d 498 (Minn. 1991). 18. Id. at 353, 444 S.E.2d at 316. familiarity” will give him or her 45. Id. at 502. 19. Id. at 353, 444 S.E.2d at 317. “an invaluable advantage in mak- 46. Id. 20. Id. at 353, 444 S.E.2d at 316. Oddly, ing legal argument, but particular- 47. Id. despite the Henson Court’s uphold- ly in pursuing settlement”) (inter- 48. Id. (internal footnote omitted). ing of the general counsel’s con- nal quotation marks omitted). 49. 227 F. Supp. 2d 954 (N.D. Ill. 2002). tractual rights, the Court’s opinion 30. Id. at 560, 28 Cal.Rptr.2d at 637, 50. Id. at 966. later recognizes the very concept 869 P.2d at 1162 (“When . . . in- 51. Id. at 964-65. emphasized by the Supreme Court house lawyers sue their clients, the 52. Id. at 966. in AFLAC. In rejecting a conspiracy former relationship of trust and 53. Id. claim, the Henson Court stated it confidence becomes an unfair tacti- 54. General Dynamics, 7 Cal. 4th at was reluctant to permit a conspira- cal and informational advantage 1189, 876 P.2d at 503-505, 32 Cal. cy claim “where the alleged that the client may well view as a Rptr.2d at 17-18. wrongful act is the discharge of serious betrayal.”). 55. See generally Ryan v. Butera, legal counsel, for due to the confi- 31. AFLAC, Inc., 264 Ga. at 353, 444 Beausang, Cohen & Brennan, 193 dential and highly sensitive nature S.E.2d at 316. F.3d 210, 216 (3rd Cir. 1999) (dis- of the relationship between an 32. Id. (quoting Dorsey v. Edge, 75 Ga. tinguishing between “general” and attorney and client, public policy App. 388, 392, 43 S.E.2d 425 “specific” retainers); Brickman & mandates that the client be (1947)). Cunningham, Nonrefundable absolutely free to discharge his 33. See, e.g., General Dynamics Corp. Retainers Revisited, 72 N.C. L. Rev. attorney at any time, for any rea- v. Superior Ct., 7 Cal. 4th 1164, 1, 6 (1993) (discussing difference son he chooses.” Henson, 171 Ga. 1178-79, 876 P.2d 487, 496, 32 between general and specific App. at 730, 321 S.E.2d at 211. Cal.Rptr.2d 1, 10 (1994) (holding retainers). 21. AFLAC, Inc., 264 Ga. at 353-54 n.4, that in-house attorney could bring 56. See, e.g., AFLAC, Inc. 444 S.E.2d at 317 n.4. breach of implied contract claim); 22. Id. at 352 n.1, 444 S.E.2d at 315 n.1. Chyten v. Lawrence & Howell 23. Id. at 353, 444 S.E.2d at 316. Investments, 23 Cal. App. 4th 607, 24. Id. (quoting Demov, Morris, Levin 612, 46 Cal.Rptr.2d 459, 462 (1993)

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