A ruling earlier this month by U.S. District Judge Cormac Carney has sparked discussion and debate in the white collar bar on the subject of the level of detail required when lawyers warn a company’s employees in internal company investigations that they represent the company, not the employee. The WSJ reports that Judge Carney dismissed portions of the government’s criminal case against a former executive of semiconductor companyCorp. after finding that the law firm hired by Broadcom to review possibly illegal stock-option grants failed to explain clearly to the executive that it wasn’t representing him. Judge Carney also reportedly referred the law firm to the California state bar for disciplinary action, citing “ethical misconduct.”
The law firm involved, Irell & Manella, stated that the judge’s ruling was an “error” and that all of the law firm’s disclosures were proper. Irell & Manella lawyers assert that they told the Broadcom executive that the information he provided them could be disclosed to Broadcom’s audit committee and the government, but he does not recall receiving such notice.