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FTC proposes new attorney standards

by William McConnell | Published May 16, 2012 at 2:21 PM

Call them paranoid, but antitrust lawyers who practice before the Federal Trade Commission think the agency is mad at them.

The FTC is proposing a tougher set of professional standards for lawyers representing clients before the commission. The proposed revisions of conduct standards are included in a broader set of changes to investigatory procedures the agency is considering. The proposals apply to all types of FTC investigations, including merger reviews.

Lawyers doing business there say they don't know who or what action provoked the agency. Some suspect that commissioners got riled after not receiving what they consider to be an appropriate level of cooperation from lawyers involved in one or more investigations. The FTC didn't make anyone available to talk about the proposed changes.

"Obviously, someone pissed the FTC off," says one antitrust lawyer.

The batch of proposed changes, unveiled Jan. 13, is billed by the FTC as an attempt to improve the fairness, efficiency and openness of investigations and to require new levels of transparency by the commission. But many in the antitrust bar were taken aback by the provisions aimed at lawyers.

"Although it is apparent that the commission has serious concerns about how the investigative process is working, it is not entirely clear ... what those problems are," ABA antitrust section chairman and Mayer Brown LLP partner Richard Steuer wrote in a comment submitted to the agency March 22.

The changes would spell out types of misconduct that could result in disciplinary action. Conduct that's "contemptuous, obstructionist, or violates appropriate standards of professional conduct" as well as instances where an attorney "knowingly or recklessly provides false or misleading information" to the commission or its staff could result in a public reprimand or even in suspension or disbarment from practicing before the FTC. In some cases, the lawyer's supervising attorney also may be held responsible.

The proposal also establishes a new framework for evaluating and adjudicating allegations of attorney misconduct, allowing commission staff to confidentially submit allegations to designated officers within the bureaus of Competition or Consumer Protection. After the investigating officer's work is completed, he or she may recommend that the commission consider the charges.

Finally, the revised rule introduces a process for issuing attorney reprimands without an evidentiary hearing.

Other changes are designed to expedite investigations and adapt the FTC's investigatory processes to advances in electronic discovery. For example, parties subject to subpoenas and civil investigative demands, or CIDs, must confer with commission staff on an accelerated basis to resolve electronic discovery issues, petitions to limit or quash subpoenas and CIDs. The targets of investigations can take heart in the fact that they would be relieved of their obligation to preserve documents related to the proceeding if a year passes with no written communication from the agency.

Although antitrust lawyers support efforts to expedite investigations, they take issue with many of the specifics the FTC has proposed, such as why the agency should be permitted to disclose nonpublic investigations to potential witnesses or other third parties. Also, a proposed deadline that would give affected parties only 10 days after receipt of a request for documents to raise all issues related to the request "would impose a significant burden on outside counsel and responding parties," Steuer wrote in the bar's comments. The bar suggested sticking with the current practice of starting discussions of the document request within 10 days but allowing other issues to be discussed as they arise.

Regarding reprimands, the bar criticized the new rules as vague, leaving the commission with "unfettered discretion to reprimand, suspend or even disbar practicing attorneys." Members of the bar have noted that the FTC already has power to impose penalties or refer matters to local bar authorities. Steuer suggested the agency take a pause, and urged the ABA and other stakeholders to engage in a dialogue with the FTC to craft "specifically-targeted changes to address the precise problems the commission has experienced."

In other words, it's time for a little mediation.

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