[textbook]Traversing the Ethical Minefield Problems, Law, and Professional Responsibility by Susan R. Martyn (z-lib.org)(1) (1)

The process of structuring the bond sales program was reviewed by Kaye, Scholer and Jones Day to assure
compliance not only with securities laws and regulations, but also with banking and FSLIC laws and regulations.
Moreover, there is evidence which suggests that political contributions were made on
behalf of ACC, in exchange for ACC’s consent that Jones Day could “bill liberally.” On
June 23, 1986, Kneipper memorialized a phone conversation:
1) 1:15 p.m. Ron Kessler — in past, firm has given $amt. to PAC, has premium billed, & PAC contri. to
candidate; concern that we’re an out of state law firm and that a $# in excess of $5,000.00 would look like an
unusual move; Barnett and Kessler have done before; question re whether and how we can get some busi. from
GOV. for this.
(2) 3:40 p.m. Jim Grogan
Ten tickets at $1,000.00 equals $10,000.00
Barr wants limits of $5,000.00/ contribution.
Agreed that we could bill liberally in future in recognition of this.
At deposition, Kneipper testified that his note — “agreed could bill liberally in
recognition for this,” — “is what it appears to be.” Jones Day set up an Arizona Political
Action Committee (“PAC”) specifically for the purpose of making a contribution to an
Arizona gubernatorial candidate. The PAC was opened on September 4, 1986 and closed
in December, 1986, after the contribution was made.
In June 1986, Jones Day solicited additional work from ACC. Jones Day attorney
Caulkins wrote, in part:
Rick Kneipper reports that ACC is very explicit that it does not care how much its legal services cost, as long as
it gets the best. He states that Keating gave him an unsolicited $250,000 retainer to start the thrift work, and sent
another similar check also unsolicited in two weeks. On the down side, he reports that he has never encountered a
more demanding and difficult client, . . .
It appears to Rick and to me that American Continental is made for us and we for them.
On October 28, 1986, Jones Day provided an opinion letter, required by Item 601(b)
of SEC regulation S-K, for inclusion in an ACC bond registration statement. Jones Day’s
opinion letter stated that the indenture was a valid and binding obligation under California
law. . . .
This evidence raises material questions concerning . . . [state securities law violations
and common law fraud] . . .
4. Breach of Fiduciary Duty to Lincoln . . .
An attorney who represents a corporation has a duty to act in the corporation’s best
interest when confronted by adverse interests of directors, officers, or corporate affiliates. It
is not a defense that corporate representation often involves the distinct interests of
affiliated entities. Attorneys are bound to act when those interests conflict. There are
genuine questions as to whether Jones Day should have sought independent representation
for Lincoln.
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