Blowing the whistle on a company or a client you represent will likely upend your professional and personal life, say former informants and the lawyers who represent them, so it’s best to consider the possible consequences.

This year, two general counsels turned whistleblowers saw their claims validated, but only after years of investigations, discovery, depositions, motion hearings and, in one case, a three-week jury trial.

In February, former Bio-Rad Laboratories Inc. general counsel Sanford “Sandy” Wadler was awarded $11 million in damages by a San Francisco jury. In late March, at least partly because of cooperation by former ZTE USA general counsel Ashley Yablon, ZTE’s parent company—ZTE Corp.— pleaded guilty to conspiring to violate the International Emergency Economic Powers Act by illegally shipping surveillance equipment to Iran.

For Wadler and Yablon, acting against their client-companies came with a steep emotional toll. Wadler was abruptly fired after 24 years with the company in a meeting that he described on the witness stand as “getting hit with a baseball bat.” Yablon said in an interview with affiliate publication Corporate Counsel that the entire process, which included interviews with dozens of FBI agents and lawyers from the U.S. Department of Justice, took a toll on him “physically, financially, emotionally and on my marriage.” He told a reporter, “I don’t wish that on anyone.”

Related:

Meet the Bio-Rad GC Who Blew the Whistle

GC Ashley Yablon Risks Everything to Expose Illegal Activity

The Recorder asked several labor and employment attorneys about what questions a potential whistleblower should ask himself or herself before making an official complaint. We highlight below some of the questions from these conversations.

1. Are you ready to lose your job?

Avi Kumin, a partner at Katz, Marshall & Banks in Washington, said potential whistleblowers need to consider that they could lose their jobs—or even their careers—after reporting employer misconduct.

“How bad is the misconduct, and how willing are you to stand up for these legal issues, pushing the company in the right direction?” Kumin said.

Particularly for in-house counsel, it’s harder to get a job after being labeled as a whistleblower because counsel are hired into a “position of trust,” he said. Turning on your past employer doesn’t usually inspire confidence among other employers, Kumin said.

Mary Inman, a San Francisco-based partner at Constantine Cannon, an antitrust and litigation firm, said whistleblowers who go through the public court system are often labeled with a “scarlet W on their chest.” Many employers want nothing to do with hiring a known whistleblower, she said, so it’s best to have another job lined up before taking action.

2. If you’re an in-house lawyer who investigates compliance issues, have you reported through your company’s internal reporting structure?

Thomas Sporkin, a partner at Buckley Sandler in Washington who is a former U.S. Securities and Exchange Commission enforcement official, said in-house lawyers responsible for compliance and internal investigations have a particularly difficult job: At times, depending on to whom they report and how they report what they find, they could be held separately liable for misconduct they uncover.

“You’re really caught in a jam because if you rock the boat, you could be fired and if you report outside the company, you could be violating your legal privilege, and if you don’t do anything, you could be charged by the [SEC],” Sporkin said. He said in-house compliance managers can also take advantage of confidential, nonpublic reporting channels, such as the SEC’s whistleblower tip line.

3. Have you got your paper (or electronic) trail in order?

In most cases, if the employee is fired, then the employee has to prove he or she was terminated because of whistleblowing activity, and not for some unrelated or performance matter. That usually means having documents and emails that show the employee’s opposition to some company misconduct, and keeping track of good performance reviews.

4. For an in-house lawyer who’s bringing a complaint, are you in a state where you can be fined for breaching ethics rules?

Kumin said that some states, including Virginia and Maryland, have adopted the American Bar Association’s rules for when counsel can publicly disclose previously confidential information. ABA Model Rule 1.6 allows for disclosure of attorney-client privileged information if it is to prevent a crime. But, Kumin said, some big states for litigation, including Washington, D.C., California, New York and Massachusetts, have not adopted those rules as written. Though similar, these states’ rules only allow for disclosure of privileged information as a means of defense, not as a tool when filing a claim.

“It’s possible that, if you bring a whistleblower suit, not only will you have the normal difficulties of winning a case,” Kumin said, “but also, if you publicly disclosed privileged information, you could face sanctions by state ethics boards.” You could be sued.

Are you considering leaking classified government information? You should know that could result in a prison sentence. Mark Zaid, managing and name partner in his own office in Washington, D.C., recently told an ABA panel on national security that leaking classified data crosses an ethical line.

5. How prepared are you for the publicity?

Inman said she warns her clients about potentially being involved in blockbuster court cases that could invade their private lives and those of their families. If the dollar amount in damages sought is sky high, Inman said, the public reception will only be bigger.

“The media loves a story of David v. Goliath,” Inman said.

 

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