I mentioned in the last class that you always need to have your own lawyer (which both the philanthropist in assignment #1 and the husband and wife in assignment #2 should have had and the cases would be much clearer and simpler). From this morning’s news (The AmLaw Daily):
Lessons From the Stanford Scandal: Bring Your Own Lawyer
Laura Pendergest-Holt, the former chief investment officer of Stanford Financial Group, is the only person charged with a crime (so far) in the billion-dollar scandal emerging around the investment group--and she is charged not with stealing any money, but with lying to lawyers for the Securities and Exchange Commission during testimony she gave on February 10.
The only defense lawyer in the room with Pendergest-Holt that day was Proskauer Rose partner Thomas Sjoblom, an experienced white-collar defense lawyer (and former SEC staffer). Twice during early testimony, Sjoblom made sure to remind the SEC's lawyers that he was the company's lawyer, not Pendergest-Holt's personal attorney. Take this exchange between Sjoblom and Kevin Edmundson, assistant regional director for the SEC's Fort Worth, Texas, office:
Edmundson: "Just so we're clear. As I understand your statement, you do not, as far as you're concerned, represent the witness here today?"
Sjoblom: "I represent her insofar as she is an officer or director of one of the Stanford-affiliated companies."
Later during a break in questioning, Sjoblom actually called his secretary to have her pull the engagement letter so he could check that he indeed represented all Stanford-affiliated companies.
To many lawyers, the exchanges make clear that Pendergest-Holt walked into one of the trickiest situations for a high-level official of a company under investigation: testifying before the SEC with representation only from a company lawyer.
"You should always have your own lawyer," says Peter Henning, a former SEC and Justice Department prosecutor who now teaches criminal law at Wayne State University Law School. "Always. At some point, the individual's interest and the company's interest are going to diverge."
White-collar defense lawyers agree the setup is typical, especially at the early stages of an investigation, but also that it is fraught with potential conflicts some witnesses won't see.