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Is It Time for an Ethics Adviser?

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By William Vogeler, Esq. on February 28, 2017 3:02 PM

With ethics issues swirling around the White House, President Trump appointed an internal adviser and his company named an outside counselor to deal with ethics concerns of the businessman-turned-president.

According to reports, President Trump's outside counsel is preparing documents for his divestiture plan that suggest a new internal ethics and compliance function. The ethics adviser would be responsible for ensuring that The Trump Organization is "not taking any actions that actually exploit, or even could be perceived as exploiting, the office of the presidency."

The adviser would be responsible for giving written approval on any deals or actions that could "potentially raise ethics or conflicts of interest issues."

Need for Ethics Advisers

With the public focused on conflicts and ethics during Trump's transition process, many companies may feel its time for an ethics adviser. As the anniversary of the Sarbanes-Oxley Act approaches, it could signal corporate good faith to engage an ethics adviser in a year of increasing corporate scrutiny.

Congress enacted the Sarbanes-Oxley Act in 2002 to protect investors from the possibility of fraudulent accounting activities by corporations. The Act mandated strict reforms to improve financial disclosures from corporations and prevent accounting fraud.

Although Trump's business ethics are in the public spotlight now, other high-profile cases have illustrated the need for ethics' oversight within corporate organizations in recent years.

In 2014, for example, GM failed to disclose faulty ignition switches linked to over 100 deaths revealed only after discovery in a wrongful death suit. It cost the company civil liability, criminal investigations, the recall of over two million vehicles, and several billion dollars. An adviser -- focused on ethics and not profits -- could have changed everything.

Ethical, Not Legal Advice

When advising a corporate client, lawyers sometimes lose sight of ethics as they focus on the law. Instead, they should consider the ethical implications of their advice. Sometimes, it could be as simple as saying, "no."

Marianne M. Jennings, a law professor writing in the University of St. Thomas Law Review, said that major scandals have involved companies whose lawyers who got lost in the forest through the trees. While lawmakers responded with corporate reforms, they did not focus on individual changes.

Jennings said lawyers must recommit to "absolute values, integrity and ethics beyond codes and rules of professional responsibility."

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