Dallas Bar Association
HEADNOTES
Focus Corporate Counsel
March 2011 Volume 36 Number 3
DBF Fellows Present 2011 Award to Charles W. Matthews National Center for State Courts, Children’s Hospital, the Cultural Trust Board and the Board of the On Wednesday, March 30, 2011, Center for American and Internathe Fellows of the Dallas Bar Foun- tional Law. He recently completed dation will honor Charles W. Mat- his term on the Board of the Texas thews as the recipient of the 2011 Center for Legal Ethics and ProfesFellows Award at a luncheon at the sionalism, and has served on the Pavilion at the Belo Mansion. The Board of Overseers of the Rand award honors an attorney who has Institute for Civil Justice and as adhered to the highest principles National Trustee for the Southand traditions of the legal profes- western Region of the Boys & Girls sion, and no one deserves such rec- Clubs of America. Mr. Matthews is ognition more than also a fervent advoMr. Matthews. cate of pro bono legal Rob Roby, Chair of services and held the the Dallas Bar Founfirst general coundation, says that Mr. sel seat on the Texas Matthews was an obviAccess to Justice ous choice because Commission. He conhe has been “an outsiders pro bono work a standing beacon of “professional responsiintegrity and leaderbility.” He believes “it ship in the Dallas, is fundamental to the Texas, and national rule of law that people legal community for have access to justice. decades.” Judge PatIt’s our obligation to rick Higginbotham protect it.” provides further Charles W. Matthews James Sales, former insight: “Charles Matthews’ fingerprints will be found President of the State Bar of Texas on many causes devoted to the and Chair of the Texas Supreme public good and many would not Court’s Access to Justice Commishave succeeded without him. His sion, sums it up this way: “There uncommon judgment and instincts is no way to measure the positive are a valued treasure, to be sought impact that Charles Matthews out when, to draw on Dr. Martin has had on the profession and on Luther King, the first step must those many less fortunate citizens be taken before the staircase is in of Texas seeking access to the jusview. Charles is a good man who tice system except to say that we teaches others by example, lifting all have been enriched by his presand redirecting their sights. He is ence. The difference he has made in the lives of the people he has what a lawyer should be.” In his long 40-plus year legal touched is an eloquent testament career, Mr. Matthews has always to his enduring legacy.” Mr. Matthews’ legacy, which he prioritized service to the bar, to the community and to those less fortu- shares with his wife Karen, includes nate. In 1971, Mr. Matthews began two sons and five grandchildren, his long and successful career at of whom he and Karen are quite Exxon Corporation (now Exxon proud. Mr. Matthews is pleased to Mobil Corporation), rising through point out that all of his immediate the ranks to become general coun- family members are graduates of sel in 1995, a position he held until the University of Texas. Last but certainly not least, Mr. retiring in 2010. One of the things of which Mr. Matthews is most Matthews is simply a wonderful proud is that, as general counsel, person whose wit and charm are he was able to continue his many well known to all who know him. The Dallas Bar Foundation got community efforts on a broader platform, inspire others at his com- it right when it decided to give this pany to pursue similar efforts and year’s Fellows Award to Charles HN set an example for other in-house Matthews. counsel. By any measure, the example George W. Bramblett and Nina Cortell are Partners at that Mr. Matthews set is remark- Haynes and Boone, LLP. Ms. Cortell can be reached at able and hard to match! Mr. Mat- nina.cortell@haynesboone.com. Mr. Bramblett can be thews serves on the Board of the reached at george.bramblett@haynesboone.com. by George W. Bramblett, Jr. and Nina Cortell
Focus
Corporate Counsel
United States v. Lauren C. Stevens: Corporate Counsel In DOJ’s Crosshairs by Bill Mateja
In the wake of the Justice Department’s recent indictment of Lauren Stevens, the former in-house counsel for a “major” pharmaceutical company, corporate counsel need to be extremely careful in responding to even the simplest of requests from regulators and governmental agencies and otherwise cooperating with such bodies. In a nutshell, the Stevens indictment alleges that Ms. Stevens withheld documents pertinent to the FDA’s informal investigation into the alleged off-label promotion of Wellbutrin, an anti-depression drug. Notably, Stevens intends to defend based on her belief that she was following outside counsel’s advice. This case ups the ante for corporate counsel in responding to government inquiries, potentially criminalizes what many would consider to be good lawyering, and places in doubt whether reliance on outside counsel’s advice will insulate a client from government misconduct claims.
The Stevens Indictment
Ms. Stevens was the attorney in charge of responding to the FDA’s inquiry, and “led a
team of lawyers and paralegals” gathering documents and information in response. The indictment alleges that Stevens caused the company to withhold relevant and allegedly incriminating documents gathered as a result of the internal review. The documents included 40 sets of slides used at continuing medical education or other programs sponsored by the company. According to the indictment, many of the slides improperly discussed off-label uses of Wellbutrin. The internal review also identified two physicians who each had spoken at roughly 500 such events. Stevens also allegedly represented, in a letter to the FDA, that the company had completed the production of the requested documents, although it allegedly had not produced any of the slide sets, including those from the two doctors. Notably, the indictment alleges that Stevens specifically asked for a memo from other lawyers on her team summarizing the “pros and cons” of producing these slide sets to the FDA. Among the “cons” was,“Provides incriminating evidence about potential off-label promotion of [the drug] that may Continued on Page 7
D&O Insurance for In-House Counsel: Are You Protected? by Kara Altenbaumer-Price
Many general counsel and other in-house counsel mistakenly believe they are protected by their company’s Director & Officer (D&O) insurance when they or the company they serve is sued. However, they are often not protected fully, and in some cases, not at all. This article explores the scenarios in which coverage may be lacking and offers solutions for protecting GCs and other in-house counsel. D&O insurance is designed to protect executives, outside directors and the companies they serve against liability arising from actions taken in the course of doing business. It, in tandem with indemnification, is designed to protect against the legal expenses of fighting litigation, as well as the underlying liability exposure. Claims against officers and directors come in many forms, from common law claims for breach of fiduciary duty to securities shareholder class actions. For attorneys, the claims often take the form of legal malpractice from the company, securities enforcement actions by regulators, securities claims by shareholders, or employment actions by disgruntled employees. A few examples:
Inside 5 SEC Increases Shareholder Control
• Trace International–Chapter 7 trustee sued GC for not adequately advising the board of its obligations to review a transaction benefiting the controlling shareholder. • Tenet Healthcare–SEC charged GC, saying he knew or should have known that the company overstated charges in its public filings. • Qwest–Plaintiffs in securities class action claimed GC was responsible for misstatements in the public filings. • Comverse–SEC entered into $3 million civil settlement with GC for stock options backdating. Even when these allegations are baseless, individuals may still face significant defense and settlement costs.
Are you an officer?
Before determining whether in-house counsel are covered by a D&O policy, we must first determine whether the counsel is an “officer” at all. Most GCs, when posed this question, answered yes. To answer this question from an insurance perspective, we must dig deeper to determine the meaning of “officer” for the given company. Continued on Page 6
LAW DAY LUNCHEON ~ Honoring our State & Local Judiciary ~ Keynote Speaker: Honorable Sidney Fitzwater
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Mediation Success: 3 Tips from the Client’s Perspective
Friday, May 13 at noon (doors open at 11:45 a.m.)
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The Hot Seat: Ethics When In-House Counsel Testifies
Tickets: $35. Tables of 10 are $350. Must be purchased in advance. For more information, contact Michelle Dilda at mdilda@dallasbar.org.