The Promise and Pitfalls of the Advice-of-Counsel Defense

Since the 1970s, the number of federal criminal statutes has exponentially increased. So too has the number of federal regulations, many of which carry criminal penalties. Though there is disagreement among DOJ lawyers, academics, and private lawyers about the precise number of criminal laws codified in federal statutes and regulations, there is no dispute that it is at least several thousand.[1]

Given the potentially severe consequences for failing to comply with the expanding web of federal criminal laws, modern companies are wise to turn to expert and sophisticated legal counsel for advice on legal compliance. “The extensiveness and complexity of the laws governing” corporate affairs “have made legal advice a crucial element of [not only] major business decisions,” but also of “more mundane kinds of corporate activity.” Douglas W. Hawes & Thomas J. Sherrard, Reliance on Advice of Counsel as a Defense in Corporate and Securities Cases, 62 Va. L. Rev. 1, 5 (1976). As the Supreme Court noted in Upjohn Co. v. United States, 449 U.S. 383, 389 (1981), the need to seek and rely on attorneys is especially important “[i]n light of the vast and complicated array of regulatory legislation confronting the modern corporation.” In the decades since these quotes were penned, their messages have become even more apt. Suffice it to say, modern corporations regularly need to rely on lawyers and compliance experts to help ensure they stay on the right side of the law.

Our white-collar defense group frequently represents executives who interface with lawyers on a regular basis in the course of making business decisions.  When the government investigates or prosecutes an executive we represent, we determine what legal advice (if any) the executive relied upon prior to engaging in the conduct at issue.  In the Eleventh Circuit, like others, this inquiry is relevant to, among other things, the defense of good-faith reliance upon advice of counsel.  For most crimes, such reliance is a complete defense because “evidence that the [accused] in good-faith followed the advice of counsel would be inconsistent with [] an unlawful intent.”  Eleventh Circuit Pattern Jury Instruction, Criminal Cases, S18 (Jan. 2019).  The Eleventh Circuit’s pattern jury instructions advise jurors that “[u]nlawful intent has not been proved if the Defendant, before acting: (1) made a full and complete good-faith report of all material facts to an attorney he or she considered competent; (2) received the attorney’s advice as to the specific course of conduct that was followed; and (3) reasonably relied upon that advice in good-faith.”

Though it appears straightforward, this instruction can present challenges.  Among others, here are a few examples of the types of questions that often arise:

  • What facts are “material”?
  • When were those facts “material”—at the time the decision was made or only after subsequent events gave previously-known information new significance?
  • How were “all material facts” fully and completely disclosed in good-faith? Will there be dispute about what facts were shared with counsel?
  • What was the attorney’s “advice”? How was it provided? Will there be dispute about what exactly counsel advised?
  • How closely did the decision or conduct at issue follow the “advice”? What other evidence is there that the client “relied upon” the advice provided “in good-faith”?

Each case is unique and whether the defense of good-faith reliance upon advice of counsel applies in a particular case requires careful evaluation of all the facts at issue in that case. This post does not provide legal advice, but rather highlights the promise of advice of counsel as a complete defense as well as some potential pitfalls that may arise when an accused invokes the defense.

[1] The reasons for and ramifications of this trend—as well as why it is so difficult to quantify the number of federal criminal laws—merit a separate blog post.