Corporate Lawyers Breaking Bad

By Joanne Doroshow, Center for Justice and Democracy at New York Law School

I cannot wait for the new Breaking Badspin-off, Better Call Saul, about the always entertaining lawyer, Saul Goodman. For those unfamiliar with Breaking Bad, Saul's a criminal lawyer. No, literally, a CRIMINAL lawyer. Saul already has a new fake website complete with a banner ad, "Welcome Lawbreakers!" It's a joke, of course, not to mention fiction. And yet, I think Saul would find himself right at home in the legal departments of some of today's mega-corporations, at least based on what we've been seeing in court lately. And that's no joke.

Last week, an extraordinary decision was issued by the federal Third Circuit Court of Appeals in an asbestos case, which really should rock the corporate defense bar. In the case, Kimberlee Williams, et al. v. BASF Catalysts LLC, et al., asbestos victims provided evidence to the court that "that BASF and ['the New York law firm that defended it for years in asbestos cases, Cahill Gordon & Reindel LLP'] systematically collected and destroyed or hid evidence of asbestos-contaminated products produced by a BASF predecessor, Engelhard, in order to evade liability and forge quick settlements." See more here. It was enough evidence to revive a fraud case against BASF and its law firm for "lying about the toxic material, then depriving those injured by it of their day in court."

This federal decision comes in the wake of fraud allegations made against a company called Garlock Sealing Technologies, which makes asbestos-containing gaskets. In that case, victims' lawyers were initially accused of withholding certain information from Garlock - an absurd claim because, as I wrote in an earlier post, the supposedly "withheld" information was already in the company's possession. If I were accused of committing fraud when I did no such thing, I'd start looking into it. And that's exactly what happened, leading to a brief filed in June by Caplin & Drysdale, finding a ton of evidence proving the exact opposite to be true; that Garlock was the party that "violated [the judges'] discovery orders, hid evidence from the bankruptcy court and presented false testimony .... 'Garlock has committed a fraud upon the court,' the accompanying memo said in its first sentence.'" It's a brutal brief, which you can readhere.

The U.S. Chamber of Commerce says it isn't worried about this new evidence. It says it intends to continue its fight for legislation to block dying asbestos victims' ability to get into court. Indeed, these kinds of things never seem to worry the Chamber, the nation's largest and richest lobbying force on behalf of many of our dirtiest and most detested industries. As I have noted before, the Chamber also never seems to worry that its agenda often runs directly counter to the interests and concerns of its own small business members. In fact, last week it happened again.

The context was the ongoing litigation around the 2010 BP Deepwater Horizon explosion and disastrous oil spill in the Gulf. One day after BP was found to be grossly negligent in causing the disaster, attorneys for the U.S. Chamber (who sue the U.S. government on average three times a week to block financial and safety regulations)filed a brief with the U.S. Supreme Court supporting BP's decision to stop spending money to help businesses it harmed and agreed to compensate. Those businesses, of course, include many of the Chamber's own members. This reality was made clear in "a harshly worded opinion," upheld by the Fifth Circuit Court of Appeals, attacking BP for this behavior and saying it could not slime out of a settlement that BP itself negotiated and agreed to. BP now wants the Supreme Court to hear their case and so does the Chamber. For the Chamber, this is in direct conflict with the best interests of its own members, whose pending claims would be tossed out if the Chamber got its way. Such ethical lapses are worthy of Saul Goodman. Or perhaps more appropriately, General Motors.

Consider, for example. GM's outside counsel, King & Spalding. This firm helpeddefend GM during product liability litigation over the faulty ignition switches, viciously fighting families who sued the company and winning the company immunity for injuries and deaths caused by its pre-2009 crashes (including those involving cars with faulty ignition switches). GM didn't fire King & Spalding when the cover-up scandal hit. Instead, it put the firm in charge (along with GM's other outside law firm, Jenner & Block and the firm's Chairman, Anton R. Valukas) of its internal investigation into the ignition switch disaster, deciding what, if anything, the company - including its lawyers - did wrong. The report found no cover-up. Fifteen company engineers and lawyers were blamed and fired. All senior management, including Michael P. Millikin, the company's general counsel, were exonerated. And King & Spalding, whose corporate lawyers sat beside at least one of those engineers as he lied during depositions, emerged unscathed.

Little media attention has been paid to the legal conflicts of interest going on at GM. In the New York Times this week, we're finally seeing a hint of concern. Writes the paper in an article about GM's Board of Directors:

There were also concerns among board members that senior management, primarily Mary T. Barra, the chief executive, and Michael P. Millikin, the company's general counsel, had been given too much latitude to chart the company's response to the ignition switch problems, according to one director who was not authorized to speak publicly. Said another G.M. official, also not authorized to speak on the matter: "It was a little bit of Mary and a whole lot of Millikin."

It was Mr. Millikin, the officials said, who pushed for G.M. to retain a former federal prosecutor, Anton R. Valukas, to investigate the long-delayed recall -- an inquiry that found no wrongdoing by either Mr. Millikin or Ms. Barra, who is also a board member.

It's certainly not my usual practice to bash lawyers. The Center for Justice & Democracy is based at a fine law school and we have great respect for many law firms with whom we work, that hire our students and do good things for the world. But some recent developments in these high-profile cases of corporate misconduct have created real concern over the ethical actions of some corporate attorneys. Saul Goodman is an outrageous, fictional character. But lately, his moral compass - or lack of one - is feeling a little too familiar.