Law Times

PAGE 12 FOCUS MAY 12/19, 2008 / LAW TIMES St. Mark's martyrdom cautionary tale for in-house counsel M BY IAN HARVEY For Law Times in the Hollinger International af- fair, but he fell just as hard. ark Kipnis never made a dime from the flood of money washing about Dubbed "St. Mark" by the jury and others in the Chicago trial, Kipnis was the in-house counsel at the company and was convicted for his role in the celebrated case that saw Conrad Black sentenced to six and a half years in prison. For his part, Kipnis, a sym- pathetic character in the moral- ity play of the Hollinger affair, only narrowly avoided jail. 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Hollinger started out a Cana- dian company but came under the purview of the Securities and Exchange Commission when it listed on the New York Stock Exchange in 1996. The period complained of in the indictment against Black et al covers 1997 through 2001, when the execu- tives siphoned out millions in unnecessary "non-compete" fees, which the prosecution charged belonged to shareholders. Co-accused Jack Boultbee received 27 months while law- yer and director Peter Atkinson got two years. David Radler, 63, former chief operating offi- cer of Hollinger International, agreed to testify against Black, his associate of 36 years, and received a 29-month sentence. All but Radler are appealing. Formerly vice president, cor- porate counsel, and secretary of Hollinger International Inc., Kip- nis' conviction rests on the jury's finding that without his work, the fraud perpetrated by Black et al could never have happened. While he didn't personally profit beyond his salary and bonus, he should have blown the whistle. As such it's a cautionary tale that should serve as a reminder for all in-house counsel, says Andrew Fleming at Ogilvy Renault LLP. "In-house counsel have for many years struggled trying to get the attention of manage- ment in terms of influencing proper behaviour," says Flem- ing. "But in the end you get what you deserve." Kipnis, by all accounts, was 'This is a wake-up call for in- house counsel generally,' says Andrew Fleming. 5/7/08 12:11:32 PM overworked and simply could not attend to the compliance is- sues in the way his position de- manded. The legal department consisted of three lawyers: him- self and two labour lawyers, one of whom was later fired as a cost- cutting move by the notoriously tight-fisted Radler. Though hired by Atkinson, in the U.S. and Canada signal- ling they plan to hold lawyers on boards and in-house account- able to a higher standard when it comes to securities compliance, the days of the long-suffering but mute corporate counsel are over. "This is a wake-up call for in-house counsel generally," says Fleming. "They can't just hide be- hind the veneer that they simply advise management. They have a duty and the courts will impose on them more and more that they have a public duty as lawyers to ensure there is no wrong-doing and to be whistleblowers." It's a daunting prospect for in-house counsel to wrestle with, says Mitchell Wolfe, past president of the Association of Corporate Counsel. "I'm not shy about telling peo- ple what I think, and I think most lawyers who have that position of responsibility will too," he says. But if having broached the is- sue with the board, the quandary is what to do if the board doesn't respond, he says. "Just because you've got a law the court heard, Kipnis reported to Radler, who spent most of his time not in the Hollinger Chicago offices but in Vancouver. And that buttresses the view that in-house counsel are often seen as the "poor cousins" in their relationship with management. Still, says Fleming, the Kipnis case underlines the need for cor- porate house counsel to step up and take on a more meaningful role within the company despite the pressures. Indeed with regulators both degree doesn't mean you're the final arbiter of all things," he says. "You've got to be careful. We're all human." His strategy would be to call a senior colleague, the outside counsel, or even the law soci- ety and get a second opinion in confidence. "You have to double-check your judgment — because this is a judgment issue," he says. "If you feel there's something wrong you have a duty to speak up, to go to the board or the audit committee if your boss is not prepared to do that." LT NARROW YOUR FOCUS Advocacy in Court: A Tribute to Arthur Maloney, Q.C. Editor: Franklin R. Moskoff, Q.C. Featuring addresses by: Edward L. Greenspan, Q.C., Sir Sydney Kentridge, Q.C. and Justice W. Ian Binnie, Supreme Court of Canada The Dubin Lectures on Advocacy, 1998-2002 News Commentary Analysis Focus Sections CaseLAw Humour Law Times Your best choice for reaching Ontario's legal market. To advertise in an upcoming issue contact our sales team: Karen Lorimer, 905-713-4339 • klorimer@clbmedia.ca Kimberlee Pascoe, 905-713-4342 • kpascoe@clbmedia.ca Kathy Liotta, 905-713-4340 • kliotta@clbmedia.ca Rose Noonan, 905-726-5444 • rnoonan@clbmedia.ca Visit Law Times on the web at: www.lawtimesnews.com www.lawtimesnews.com LT 1-4x3•Web Discount.indd 1 5/7/08 12:12:06 PM To advertise in an upcoming issue contact our sales team: Karen Lorimer, 905-713-4339 • klorimer@clbmedia.ca Kimberlee Pascoe, 905-713-4342 • kpascoe@clbmedia.ca

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