According to The Wall Street Journal, the chief legal officer of a major banking institution was recently ‘separated’ from the institution for what was described by the institution as a conflict of interest arising from a personal matter. This development focuses attention on the extent to which corporate conflicts policies should, and do, apply to in-house legal counsel.
The banking institution made no additional elaboration on the reasons for the separation nor on the nature of the conflict. It did acknowledge that the separation had nothing to do with the former CLO’s legal work, and described the former CLO as “a very qualified lawyer.”
Most large health systems have detailed board level conflicts of interest policies and procedures, including extensive conflicts disclosure policies and related procedures designed to support board members in the identification and disclosure of potential conflicts. Most such policies have specific procedures by which disclosed board member conflicts are evaluated to determine whether an actual conflict exists and, if so, what remedy should be applied. Fewer health systems have elaborate policies addressing conflicts of interest issues of executive officers, even though in many states those officers may be bound by the same duty of loyalty as are board members. However, some systems are moving toward more detailed review of the outside business interests of their executives [see above].
It would be inappropriate to speculate on the nature of the former CLO’s alleged conflict and on why the institution felt that separation was necessary. However, this situation may help health system general counsel and their executive colleagues to be more pro-active in evaluating the sufficiency of existing COI procedures and conduct codes affecting senior executive officers. It may also increase consideration of periodic consultation by CLO/GC with outside professional ethics counsel on matters that relate to professional duties and responsibilities, and compliance with internal corporate policies.