In our updates of April 20, 2009 (http://www.masudafunai.com/showarticle.aspx?Show=4544) and November 2, 2009 (http://www.masudafunai.com/showarticle.aspx?Show=5432), we reported on the case against William Ruehle, the former Chief Financial Officer of Broadcom Corporation. As background, Mr. Ruehle was charged with illegal backdating of stock options. The government sought to use information Mr. Ruehle disclosed to Irell & Manella, Broadcom's corporate counsel. The federal trial court held that information Mr. Ruehle disclosed to Irell & Manella was privileged, agreeing that Mr. Ruehle reasonably believed Irell & Manella was representing him personally and not the corporation. The trial court even referred Irell & Manella to the state authorities for possible disciplinary action for alleged conflict of interest. However, the federal appeals court overruled the trial court and found Mr. Ruehle had no reason to expect his discussions with Irell & Manella would be privileged. Therefore, the information Mr. Ruehle discussed with Irell & Manella could be used in the case against him personally.

But on December 15, based on alleged prosecutorial misconduct (unrelated to the Irell & Manella issue), the trial court dismissed the criminal charges against Mr. Ruehle. The court also dismissed, without prejudice, separate charges of the U.S. Securities and Exchange Commission against Mr. Ruehle. So, in spite of his setback from the federal appeals court, it appears Mr. Ruehle is enjoying a happier holiday than he might have expected.

It will be recalled from our updates that the issue in connection with Mr. Ruehle was whether he reasonably believed Irell & Manella was representing him personally (which would make his discussions with Irell & Manella privileged and confidential) or representing only the organization, Broadcom Corporation. The trial court felt Mr. Ruehle reasonably believed Irell & Manella was representing him personally, but the appeals court disagreed.

As an aside, the new Illinois Rule 1.13, discussed above, has something to say about this type of issue. Rule 1.13(f) states that, when dealing with an organization's directors, officers, employees, members, shareholders or other constituents, an attorney "shall explain the identity of the client when the lawyer knows or reasonably should know that the organization's interests are adverse to those of the constituents with whom the lawyer is dealing."

Therefore, if Illinois Rule 1.13(f) applied to the case against Mr. Ruehle (which, of course, it did not), Irell & Manella would have needed to explain to Mr. Ruehle that Irell & Manella was representing only Broadcom and not Mr. Ruehle personally. (Irell & Manella claimed its attorneys did so, but Mr. Ruehle claimed he had no memory of such an explanation.)