Legal Ethics: In-House Counsel and Sex with the Corporate “Client”

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On July 21, 2021, the Supreme Court of Virginia rejected without comment a proposed amendment to Rule 1.8, which governs “prohibited transactions.” Specifically, Rule 1.8(k), as proposed, would have provided that: “A lawyer shall not have sexual relations with a client unless a consensual sexual relationship existed between them when the client-lawyer relationship commenced.” The proposed rule’s underpinning rested, in part, on the concern that the attorney holds a position of power in the attorney-client relationship. Absent additional context, it can be presumed that the relationship is inherently unequal and that there exists a conflict in the representation (or at least the potential for one). However, the Supreme Court’s rejection of the amendment doesn’t overrule existing authority that (mostly) proscribes sex with clients.

Consider, for example, the attorney who has sex with her client during the representation of him in his divorce. Not only may there be negative consequences to the client-husband in the divorce proceeding because of his affair, but the lawyer’s independence of judgment and duty of loyalty would necessarily be called into question. And, yes, as problematic as it sounds, lawyers engage in sex with their clients with too much frequency. I will spare you the Virginia cases, but a disciplinary complaint filed on August 27, 2021, as to an Ohio attorney highlights the issue.

So, then, what of the intimate relationship between the director of human resources and the in-house counsel who provides her with legal advice in, for example, handing employee grievances. In other words, can an in-house lawyer engage in sexual relations with his or her “corporate” client? To answer this question, it is necessary to identify the lawyer’s client. In representing an organization, the lawyer’s client is the organization itself, acting through its highest officer, employee, or body, overseeing the particular engagement. So, when considering whether one “can” have sexual relations with an organization, the answer is” yes” where an individual overseeing the representation of the corporation is deemed to be the client. As to whether such sexual relations are permitted, the answer in many cases will be “no” from an ethical perspective (irrespective of employment law and company policies).

Comment 19 to the proposed rule change provided: “When the client is an organization, paragraph (k) of this Rule prohibits a lawyer for the organization (whether inside counsel or outside counsel) from having a sexual relationship with a constituent of the organization who supervises, directs or regularly consults with that lawyer concerning the organization’s legal matters.” The guidance provided by the proposed comment is not only sensible but is also in keeping with existing authority.

As to existing ethics authority, Virginia Legal Ethics Opinion 1853 “outlines the host of ethical problems a lawyer faces in having a sexual relationship with a client during the course of a professional engagement.” Specifically, “It is apparent that entering into a sexual relationship with a client during the course of representation can seriously harm the client’s interests. The numerous ethical obligations of a lawyer to a client are so fundamental to the attorney-client relationship that obtaining the client’s purported consent to entering into a sexual relationship with the lawyer will rarely be sufficient to eliminate any potential ethical violation. Therefore, it is the opinion of this Committee that a lawyer should refrain from entering into a sexual relationship with a client. In most situations, the client’s ability to give the informed consent required by Rule 1.7(b) is overwhelmed by the lawyer’s position of power and influence in the relationship and the client’s emotional vulnerability.”

Even in circumstances where the attorney may not have a heightened position of power (e.g., the general counsel reports to the company president), impartiality and independence are likely casualties of any romantic relationship. If you have any doubt, ask yourself this: “Could another employee question my legal counsel if they knew of my relationship?” Of course, they can and will regardless of the merit of the advice because the perception will be that your judgment is clouded by your relationship.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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