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2003 Statement of Polices Concerning Outside Counsel
Conflicts of Interest

 


FDIC
Federal Deposit Insurance Corporation
Washington, DC 20429 Office of the General Counsel

      December 2003

2003 Statement of Policies
Concerning Outside Counsel Conflicts of Interest

These policies set for the guidelines for the FDIC with respect to outside counsel conflict of interest matters. The policies are administered and applied by the FDIC Legal Division.

In accordance with the “Outside Counsel Conflict of Interest Procedures” issued in December 1996, these policies apply to all requests by FDIC outside counsel for waivers submitted to the FDIC Outside Counsel Conflicts Committee.

The “Statement of Policies Concerning Outside Counsel Conflicts of Interest” issued in June 1998 and December 1993, as well as the “Guidelines of the FDIC/RTC with Respect to Conflict of Interest and Confidentiality and General Policies of Waiver Favored by the Outside Counsel Conflicts Committee” issued in May 1990, are hereby superseded.

These policies are effective immediately.

[signed]
General Counsel

Attachment



DECEMBER 2003

2003 Statement of Policies
Concerning Outside Counsel Conflicts of Interest

I. Introduction
The resolution of conflicts of interest in connection with the selection and retention of outside legal counsel employed by the Federal Deposit Insurance Corporation ("FDIC") will be governed by these policies.

These policies are for the guidance of the FDIC Legal Division in its relations with outside counsel, for the information of outside counsel who have been or seek to be retained by the FDIC, and for the general use of the FDIC Outside Counsel Conflicts Committee ("Conflicts Committee"). They supersede the "Statement of Policies Concerning Outside Counsel Conflicts of Interest”, issued in June 1998 and December 1993, as well as the “Guidelines of the FDIC/RTC with Respect to Conflicts of Interest and Confidentiality and General Policies of Waiver Favored by the Outside Counsel Conflicts Committee” issued in May 1990.

Procedures for requesting waivers of outside counsel conflicts are contained in "Outside Counsel Conflict of Interest Procedures" issued in December 1996.

II. Definitions
As used in these policies:

"Conflict of interest" or "conflict" means a situation in which outside counsel; any management official or affiliated business entity of outside counsel; or outside counsel’s employee, agent, or subcontractor who will perform professional services for the FDIC as a time charger: (1) has a personal, business, or financial interests or relationships that would cause a reasonable individual with knowledge of the relevant facts to question their integrity  or impartiality; (2) is an adverse party to the FDIC in a lawsuit; (3) submits an offer to acquire an asset from us for which services were performed during the past three years, unless the agreement allows for the acquisition; or (4) engages in an activity that would cause us to question the integrity of the service you provided, are providing or offer to provide us, or impairs your independence.1 Under these policies, a conflict of interest includes any representation or any interest adverse, potentially adverse, or presenting the appearance of being adverse to the FDIC, whether or not it is of a nature sufficient to affect counsel's legal judgment or ability to represent the FDIC zealously. A conflict of interest may arise in litigation or in a non-litigated matter. A conflict may also arise when outside counsel fail to cooperate with the FDIC in the resolution of a fee bill audit performed by the FDIC Office of the Inspector General.2

"Conflicts Committee" means the FDIC Outside Counsel Conflicts Committee, which is responsible for resolving outside counsel conflicts of interest.

"FDIC" means the Federal Deposit Insurance Corporation in all its capacities, whether as conservator, receiver, in its corporate capacity, organizer of a bridge bank, successor to the former Resolution Trust Corporation, or successor to the former Federal Savings and Loan Insurance Corporation.

"Institution" means any bank or savings association the deposits of which are insured by the FDIC.

"Legal Services Agreement" or "LSA" means an executed agreement between the Legal Division of the FDIC and outside counsel setting forth the terms and conditions of
employment of outside counsel.

"Outside counsel" means a lawyer, law firm or law firms providing services to the FDIC. The term includes all attorneys in a firm, regardless of their status or designation.

"Special Issues" mean (a) core issues concerning the validity of the statutes under which the FDIC operates, the competency of the FDIC to act under such statutes, the legitimacy of such conduct, and the rights, status or powers exercised by the FDIC; (b) matters of first impression or fundamental significance; or (c) matters of high visibility or sensitivity.

"Substantially related" means having a commonality of law or fact between representation of the FDIC and representation of another client.

"Waiver request" means a written request for a waiver by outside counsel to the FDIC Legal Division of an actual or potential conflict of interest or a matter that may present the appearance of a conflict of interest.

III. Policy Objectives
The FDIC expects the highest ethical standards to be followed by outside counsel. At a minimum, outside counsel must observe: (1) applicable state bar rules of professional
conduct with respect to both conflicts of interest and confidentiality; (2) the American Bar Association Model

Rules of Professional Conduct ("Model Rules") to the extent that the Model Rules are not contrary to applicable state bar rules; and (3) the requirements of 12 C.F.R. Part 366.

The FDIC is particularly cognizant of the consequences in terms of public perception of retaining outside counsel and seeks to avoid even the appearance of conflicts of interest. The Legal Division requires outside counsel to represent the FDIC with undivided dedication and loyalty. Therefore, these policies are not to be construed narrowly.

The FDIC requires outside counsel to observe scrupulously all relevant requirements of attorney-client confidentiality. Confidentiality is crucial to the relationship of confidence and trust that the FDIC expects of outside counsel. The Model Rules provide that the confidentiality principle extends from information disclosed in confidence by the client to information gained from any source regarding the representation and exists both during and after the time of the representation. The FDIC is particularly concerned with safeguarding confidences and proprietary information and will take appropriate measures to ensure that such confidentiality is not jeopardized or breached.

IV. Scope
In general, the FDIC requires that any actual, potential, or appearance of a conflict of interest be reported to the conflicts coordinator in the Legal Division office or section that is responsible for overseeing the LSA with the outside counsel. There also are specific reporting requirements contained in 12 C.F.R. Part 366 as amended or superseded. To the extent these policies and 12 C.F.R. Part 366 differ in scope, the broader interpretation controls. The Legal Division, and not outside counsel, will make the determination whether a conflict exists. Procedures for requesting waivers of outside counsel conflicts of interest matters are contained in the "Outside Counsel Conflict of Interest Procedures" issued by the Legal Division. After a conflict has been reported, outside counsel must notify the Legal Division of any material change in facts.

On most matters, conflicts of interest with the Office of Thrift Supervision, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the National Credit Union Administration, and the Department of Justice (usually only on matters involving closed Institutions or their directors and officers or related third parties) are considered conflicts with the FDIC.

Even though an actual conflict, potential conflict, or appearance of a conflict may be too remote to cause a court to order counsel disqualified, the Conflicts Committee may nevertheless deny a waiver or take other corrective action. When in doubt, outside counsel must disclose the matter and seek a waiver.

A. Servicers
The FDIC may retain the services of various entities to manage and dispose of failed Institutions' assets ("Servicers"). These entities, in turn, are authorized to retain outside counsel for purposes of managing and disposing of the FDIC's assets. In these situations, outside counsel are not supervised directly by the FDIC and the degree to which attorneys of the Legal Division exercise control over the selection of counsel varies. Nevertheless, as contractors, Servicers are subject to the requirements of 12 C.F.R. Part 366 and are also expected to adhere to these policies in their entirety.

B. Subcontractors
The Legal Division may approve the retention of subcontractors, particularly experts or consultants, for assistance, opinions or testimony in the development of particular legal matters. These subcontractors may be attorneys or non-attorneys. Generally such subcontractors are engaged by outside counsel with approval from the Legal Division and
their services are billed to outside counsel.3

When engaging experts or consultants or other subcontractors, outside counsel must be cognizant of the requirements of the regulations at 12 C.F.R. Part 366. Outside counsel must make representations and certifications regarding any disqualifying conditions (discussed infra) and conflicts of interest of their subcontractors who will perform
professional services for the FDIC as time chargers under the subcontract. Disqualifying conditions and conflicts of interest of such subcontractors must be submitted to the Conflicts Committee for appropriate action.

C. Subsidiaries
Outside counsel representing a subsidiary (regardless of the tier) of an Institution under the control of the FDIC must submit any conflict of interest to the Legal Division for consideration by the Conflicts Committee. Further, outside counsel representing an interest adverse, potentially adverse, or appearing to be adverse to a subsidiary also must submit any conflict of interest to the Legal Division for consideration by the Conflicts Committee.

V. Representational Conflicts Of Interest
Outside counsel may not, without a waiver, engage in a simultaneous representation of the FDIC and another client having an interest adverse, potentially adverse, or even appearing to be adverse to the FDIC. In the event that outside counsel no longer represents the FDIC it may not later represent another client against the FDIC in a matter substantially related to any matter in which outside counsel previously represented the FDIC.

Examples of situations in which representational conflicts of interest can arise include those matters in which outside counsel represent any of the following:

(1) A client having an interest adverse to any Institution for which the FDIC acts as conservator or receiver;

(2) An open Institution that subsequently fails or a client having an interest adverse to such an Institution;

(3) A debtor-in-possession, trustee in bankruptcy, or a receiver in any federal or state court or administrative proceeding in which the FDIC has an interest, as a creditor or otherwise;

(4) A creditor in a bankruptcy, receivership, or other litigation proceeding where the FDIC has asserted claims against the same debtor in either the same or an unrelated proceeding;

(5) An insurance carrier or stockholder or class of stockholders in any action against a director or officer of an Institution;

(6) An Institution regarding regulatory matters or assistance transactions;

(7) An officer, director, debtor, creditor or stockholder of any failed or assisted Institution in a matter relating to the FDIC; and

(8) A prospective bidder for a troubled or failed Institution, or the assets of such Institution.

VI. Non-Representational Conflicts/Disqualifying Conditions
Generally, outside counsel must seek a waiver if outside counsel have any type of interest adverse, potentially adverse, or even appearing to be adverse to that of the FDIC, whether or not it is of a nature sufficient to affect counsel's legal judgment or ability to represent the FDIC zealously. In particular, a waiver must be sought if: (1) outside counsel cannot subscribe to all of the representations and certifications required by 12 C.F.R. Part 366; (2) outside counsel have an ideological or other commitment that would impair the outside counsel's judgment or ability to represent the interests of the FDIC zealously; (3) the FDIC has a claim against outside counsel or any of their individual attorneys; or (4) outside counsel have been advised of a conflict of interest pursuant to an unresolved fee bill audit.

A. Contractor Conflict of Interest Regulations
Disqualifying Conditions - The Contractor Conflict of Interest Regulations at 12 C.F.R. Part 366 prohibit the hiring of outside counsel who have: (1) been convicted of any felony; (2) been removed from, or prohibited from participating in the affairs of, any insured depository institution pursuant to any final enforcement action by the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Board of Governors of the Federal Reserve System, or the FDIC; (3) demonstrated a pattern or practice of defalcation;4 or (4) caused a substantial loss to federal deposit insurance funds.5 Prior to retention outside counsel must also agree that they will not allow any employee, agent, or subcontractor who will perform professional services for the FDIC as a time charger to perform those services without verifying that such individuals are not disqualified because of the existence of any of the conditions above.

Outside counsel firms or their “management officials” with one or more disqualifying conditions will be disqualified from working for the FDIC. For a partnership, a management official is any member of the management committee if such a committee exists or, if none, any general partner of the firm. The Conflicts Committee will terminate outside counsel’s legal services and direct the orderly transfer of work away from such firms. A disqualifying condition that pertains only to an individual who is not a management official may result  in that individual’s being prohibited from performing services for the FDIC.

Examples of Non-representational Conflicts – Examples of situations in which non-representational conflicts of interest can arise include those matters in which outside counsel or any management official, affiliated business entity, or any employee, agent or subcontractor of outside counsel who will perform professional services for the FDIC as
a time charger:

(1) Is an officer, director, or substantial shareholder of an Institution;

(2) Has any outstanding debt, whether performing or in default, owed to any failed Institution (excluding debts assumed by an operating Institution);

(3) Is closely related to any person who is employed by the FDIC, is in litigation with the FDIC, has outstanding debt owed to any failed Institution or an ownership interest in such an Institution; and

(4) Served or serves as a trustee in bankruptcy or as a receiver in any federal or state court or administrative proceeding;

(5) Is currently a party to an administrative or judicial proceeding in which any of them is alleged to have engaged in fraudulent activity or has been charged with the commission of a felony.

In addition, the regulations specify that outside counsel must disclose whether they or their management officials, affiliated business entities, employees, agents, or subcontractors are an adverse party to the FDIC in a lawsuit (further discussed in part infra), or have ever been suspended, excluded, or debarred from contracting with a federal entity, or have ever had their legal services terminated by the FDIC prior to completion of the LSA for reasons that involved issues of conflicts of interest or ethical responsibilities.

Prior to retention outside counsel must also agree that they will not allow any employee, agent, or subcontractor who will perform professional services for the FDIC as a time charger to perform those services without verifying that such individual has no conflicts of interest.

B. Ideological or Other Commitment
Representation by outside counsel of borrowers in lawsuits against lenders for alleged improper lending activities may constitute such a commitment to a particular legal position or to particular special interests as to constitute a conflict. Similarly, extensive
representation of accountants or insurance companies on bond claims may also constitute such a commitment.

C. Claims Against Outside Counsel
Investigation Ongoing – When malpractice or similar claims by the FDIC against a law firm or individual thereof are being investigated, Legal Division staff may recommend to the Conflicts Committee that a moratorium on new assignments be imposed on the firm. Once imposed, the moratorium may be removed only by action of the Conflicts Committee or the General Counsel.

Suit has been filed – If a firm is sued by the FDIC for malpractice or similar claims, there is a presumption against continued use of that outside counsel. It is FDIC policy that existing assignments are to be removed and no new referrals are to be made. Exceptions to this policy may be granted on a case-by-case basis by the Conflicts Committee or the General Counsel.

If a suit against an individual attorney or employee does not also give rise to a suit against his or her firm, the conflict must nevertheless be reported and a waiver sought. Where a suit has been filed by the FDIC against an individual attorney, the Conflicts Committee may allow the attorney's firm to perform services for the FDIC if appropriate screening mechanisms are established. However, the Legal Division may decline to use the outside counsel firm if the alleged acts of an individual attorney are egregious, the livelihood of the firm is heavily dependent on the individual attorney who is the subject of the claims, or there are other factors that create an appearance of impropriety.

D. Unresolved Audit Issues
The FDIC Office of the Inspector General and/or Internal Review Unit of the Legal Division routinely audits or performs post-payment reviews of outside counsel billings and the supporting documentation for FDIC matters. These audits or reviews are documented in reports that may question certain costs and recommend that the Legal Division disallow and attempt to recover such costs. Outside counsel are afforded the opportunity to respond to these reports. If the Legal Division agrees with the analysis and recommendation and disallows all or a portion of the questioned costs, active resolution efforts will be undertaken by the Legal Division and outside counsel will be given an opportunity to respond to the Legal Division’s requests for repayment of disallowed amounts.

If outside counsel fail to provide a response to the findings, or fail to remit the disallowed costs, or otherwise fail to respond adequately to the issues raised in the report, pursuant to the “Statement of Policy on Contracting with Firms that Have Unresolved Audit Issues with the FDIC,” 62 Fed. Reg. 13382 (March 20, 1997), outside counsel will be advised in writing by Legal Division staff responsible for the audit that failure to cooperate constitutes a conflict of interest with the FDIC. Unless the matter is resolved to the FDIC’s satisfaction within ten business days of receipt of the written notice, the matter will then be referred to the Conflicts Committee for appropriate action, which may include a determination that the FDIC refrain from soliciting any future services from outside counsel and/or termination of legal services on any existing legal referrals.

VII. General Waiver Policy
Generally, requests for waivers of conflicts of interest may be granted or denied on behalf of the FDIC only by the Conflicts Committee or the General Counsel.

Requests for waivers are considered only on a case-by-case basis. Requests for waivers of hypothetical future conflicts of interest or requests for blanket waivers covering multiple prospective unidentified or hypothetical matters will not be considered. Silence on the part of the FDIC may not be construed as a waiver; outside counsel should inquire of the Legal Division if no response has been received for a previously disclosed conflict.

A. Factors Considered in Granting Waiver Requests
When a waiver is requested, the Conflicts Committee will balance the need to have adequate representation of the FDIC with all relevant factors. Factors considered may include but are not limited to:

(1) The extent to which the FDIC's confidences may be compromised;

(2) The extent to which the outside counsel has been forthright in bringing the existence of the conflict to the attention of the FDIC;

(3) Any appearance of impropriety;

(4) The presence of Special Issues;

(5) The feasibility of screening mechanisms;6

(6) The impact of replacing the outside counsel on matters presently handled;7

(7) The nature and extent of the outside counsel's Institution practice;

(8) The nature and extent of the outside counsel's representation of accountants, attorneys, insurance companies, or directors and officers of failed Institutions;

(9) The extent to which the representation or acts complained of are factually or substantially related to matters currently or previously handled by the firm for the FDIC;

(10) Whether an unfair advantage is gained as a result of the outside counsel's continuing or past representation of the FDIC;

(11) Whether the conflict could affect the ability of outside counsel to represent zealously the interests of the FDIC;

(12) In any pending or proposed litigation against outside counsel, the nature of the conflict;

(13) The magnitude of any loss caused by the outside counsel's representation or conduct;

(14) The extent to which any acts complained of represent actions of an individual member or employee of outside counsel rather than a practice or pattern of behavior commonly found within the firm;

(15) The extent to which the acts complained of draw into question the competence or integrity of outside counsel; and

(16) The extent to which the FDIC is a significant client of the firm.

B. Matrix Guidelines
Conflicts of interest arising from multiple representations are often complex. A matrix illustrating positions generally taken by the Conflicts Committee with respect to certain recurrent types of representational conflicts is attached as Appendix A. The matrix is intended to represent a preliminary indication of the Legal Division’s general disposition with respect to waivers of conflicts arising from representational conflicts. It should not be regarded as a determination on the question of waiver, which can come only after a closer, more detailed consideration of a particular situation, with knowledge of relevant facts and a weighing of appropriate factors.

C. Inherited Conflicts
Outside counsel's representations against an open Institution will place the firm in an adversarial position to the FDIC upon the failure of that Institution. The FDIC requires that their outside counsel continue to screen for conflicts, including those that develop because Institutions are placed in receivership or conservatorship. Such "inherited" conflicts are more likely to be waived unless Special Issues are involved. In such circumstances, the outside counsel usually will be prohibited from performing work arising out of the particular failed Institution. Even if outside counsel have obtained a waiver from the open Institution, the outside counsel must, in the event of the Institution’s failure, also seek a waiver from the Conflicts Committee.

VIII. CONDITIONS COMMONLY IMPOSED
If a waiver of a conflict of interest is granted by the Conflicts Committee, various conditions may be imposed. In general, outside counsel may not handle any matter pertaining to the same Institution out of which the conflict arises. For example, if the Conflicts Committee grants a waiver to outside counsel representing a party suing the FDIC as receiver of a particular Institution, such a waiver will ordinarily be conditioned upon the outside counsel’s not handling any matters for the FDIC arising out of that Institution, although it could handle matters arising out of other FDIC Institutions.

Depending on the facts of each situation, conditions imposed may also preclude outside counsel from undertaking any new referrals from the FDIC office or section involved or may require the imposition of screening mechanisms, i.e., screening all attorneys who are involved in the adverse representation, or are the subject of a claim, from working on any FDIC matter, including access to the FDIC Legal Research Bank. Outside counsel may also be precluded from performing any work at all for the affected FDIC office or section during the pendency of the adverse representation, requiring that any current matters supervised by the particular office or section be transferred to other counsel. This restriction is intended to prevent individual FDIC attorneys in a particular office or section from having to deal with outside counsel as both "friend" and "foe" simultaneously.

A. Claims Against Outside Counsel
If a waiver of a conflict of interest arising from an FDIC claim against outside counsel is granted by the Conflicts Committee, outside counsel may, in addition to other conditions imposed, be required to:

(1) Agree not to assert as a defense to any claim the fact that the outside counsel has been retained or is continuing to be retained by the FDIC;

(2) Agree that no information obtained as a result of the retention will be used in defense of any claim asserted by the FDIC;

(3) Agree that disclosure of any information by the FDIC in connection with the continued retention shall not constitute a waiver of any otherwise applicable privilege; and

(4) Prohibit any attorney who is the subject of a claim by the FDIC from receiving any portion of the fees paid by the FDIC in any matter.

B. Settlement
The settlement of a claim or adverse representation brought against the FDIC or by the FDIC may eliminate the existence of a conflict. If so, the former conflict of interest will not automatically bar the continued use of the outside counsel. Nevertheless, the FDIC may take the facts and circumstances of the claim into account in assigning any future work. Any conditions imposed when a waiver of the conflict was granted generally will no longer be applicable. Upon settlement of the claim, outside counsel are expected to provide written notification to the Legal Services Group in Washington.

IX. Delegations of Authority
Previous delegations of authority granted in the 1993 “Statement of Policies Concerning Outside Counsel Conflicts of Interest” are hereby rescinded. The Conflicts Committee will make determinations concerning those conflict matters previously reviewed under delegated authority.

X. Noncompliance
Failure to make full and timely disclosure of actual or potential conflicts of interest, or matters that may present the appearance of a conflict, as well as failure to comply with FDIC conflicts of interest policies and procedures, are extremely serious matters. Such failures may subject outside counsel to corrective action including, but not limited to: (1) a letter of reprimand; (2) refusal to waive a conflict; (3) suspension of new referrals; (4) rejection or reduction of fee bills; (5) withdrawal of all pending matters; (6) termination of legal services; (7) imposition of a bar to application; (8) denial of an LSA; (9) referral to the appropriate state licensing authorities; and, in appropriate cases, (10) civil or criminal actions.

XI. Conclusion
These policies are designed to provide general guidance only. Within the framework provided by these policies, the Conflicts Committee and the staff of the Legal Division exercise broad discretion. These policies do not provide outside counsel with any right to a waiver.

Contact Information
The Legal Services Group in Washington has sole responsibility for the distribution of outside counsel conflicts policies, procedures, and other related conflicts information. For information, contact the Legal Services Unit, 3501 Fairfax Dr., Room E-6066, Arlington, VA 22226. Telephone Number (877) 275-3342.

1 See Contractor Conflict of Interest Regulations at 12 C.F.R. § 366.10.  Cf. Rule 1.7, 1.8, 1.9, and 1.10 of the Model Rules of Professional Conduct.

2 See Statement of Policy on Contracting with Firms that Have Unresolved Audit Issues with FDIC, 62 Fed. Reg. 13382 (March 20, 1997).

3
In some circumstances, experts or consultants on legal matters are retained and paid directly by the Legal Division pursuant to its delegations of authority for the provision of legal services.  These experts or consultants may be non-attorneys.  As contractors, such experts or consultants are subject to the requirements of 12 C.F.R. Part 366. Because such contractors are  retained by the Legal Division instead of the Division of Administration, the disqualifying conditions and conflicts of interest of such contractors must be submitted to the Conflicts Committee  for resolution.

4 Defined under the regulations to mean two or more instances in which a loan or advance from an insured depository institution is more than 90 days delinquent in the payment of principal, interest, or a combination
thereof and there remains a legal obligation to pay an amount in excess of $50,000.

5
Defined under the regulations to mean: (1)An obligation to us that is delinquent for 90 days or more and on which there is an outstanding balance of principal, interest, or a combination thereof of more than $50,000; (2) An unpaid final judgment in our favor that is in excess of $50,000, regardless of whether it becomes discharged in whole or in part in a bankruptcy proceeding; (3) A deficiency balance following foreclosure of collateral on an obligation owed to us that is in excess of $50,000, regardless of whether it becomes discharged in whole or in part in a bankruptcy proceeding; or (4) A loss to us that is in excess of $50,000 that we report on IRS Form 1099-C, Information Reporting for Discharge of Indebtedness.

6 The Conflicts Committee will consider such things as the: (i) size and structural divisions of the law firm; (ii) likelihood of contact between the affected attorneys(s) responsible for the adverse representation and firm attorneys performing services on behalf of the FDIC; and (iii) existence and effectiveness of measures to prevent the affected attorney(s) from gaining access to current files or sharing information gained by the firm as the result of its FDIC representation.

7  In considering whether to replace outside counsel, the Conflicts Committee will consider:  (i) availability of other experienced counsel in the geographic area; (ii) pending deadlines and the feasibility of replacement counsel's becoming sufficiently knowledgeable to pursue the matter effectively; and (iii) the cost of developing applicable expertise in replacement counsel. 

Appendix A - Probable Conflicts Committee Reaction to Requests for Waiver of Certain Conflicts Arising from Multiple Representation

Represent FDIC:
& Adverse to FDIC on:
Prof. Liability Routine
Closed Inst.
Closed Inst.
w/Special
Matters
Negotiated
Transaction
Employment
Matters
Professional
Liability
- + + + +
Routine Closed Institution + + + + +
Closed Institution with Special Issues + + - + +
Negotiated
Transactions
+ + + - +
Employment + + + + -
Enforcement - + + + +
General FDIC
Corporate &
Regulation
- + + + +


Notes:
1. Generally, the FDIC disfavors waivers of Professional Liability, Special Issues, and Negotiated Transactions matters if the firm seeking the waiver is working on the same type of matters for an adverse party. The FDIC generally permits their firms to perform Routine Closed Institution work against the FDIC (representing other creditors, bidders, asset purchasers, etc.), but not out of the same Institution or the same FDIC office or section. Also, in order to avoid even an appearance of impropriety and to ensure the integrity of the bidding process, a firm that has represented a failed Institution generally will not be permitted to bid or represent a bidder on that Institution or its assets.

2. The sign "+" means the Conflicts Committee is more likely than in the case of the sign "-" to waive a conflict. This assumes that the conflict does not (i) arise from the same transaction, (ii) to the extent that it can be determined at the time a waiver is sought, involve litigation in the same court, or (iii) arise within the same conservatorship, receivership or office or section primarily responsible for the matter.

3. The matrix addresses only conflicts that may arise out of multiple representations by outside counsel. It does not address conflicts that may arise out of relationships or adverse interests separate and apart from representations, nor does it address the
issue of confidentiality. A waiver of a conflict in connection with a multiple representation is not an authorization to breach confidentiality.

4. "Professional Liability" refers to claims arising out of conduct by those providing professional services, advice, or counsel to Institutions including, but not limited to, directors, officers, attorneys, accountants, appraisers, securities or commodities brokers, as well as fidelity bond and insurance issues involved in those claims.

5. "Routine Closed Institution" refers to asset collections, defensive matters, deposit insurance cases, and representation of bidders, whether litigated or non-litigated, where the issues raised do not involve Special Issues as previously defined.

6. "Negotiated Transactions" refers to those resolution transactions necessary to resolve the status of failing or failed Institutions where substantial negotiations are required to reach and document an agreement.

7. "Employment" refers to matters involving disputes between the FDIC and its employees.

8. "Enforcement" refers to matters involving FDIC administrative enforcement powers including, but not limited to, cease-and-desist, termination of insurance, suspension or removal, and assessment of civil money penalty proceedings.

9. "General FDIC Corporate & Regulations" refers to matters involving the FDIC as a corporation and the FDIC as regulatory agency or insurer including, but not limited to, the scope of corporate powers, the applicability of various statutes and regulations to day-to-day operations, and the applicability of various statutes and regulations to Institutions' operations. Generally, undertaking an adverse representation involving General FDIC Corporate and Regulations will be disfavored if outside counsel represents the FDIC on Professional Liability matters. Each matter is reviewed on a case-by-case basis however.

10. In the event that outside counsel may be requested to represent contractors in disputes regarding contracts with the FDIC or RTC, or in administrative proceedings involving the proposed suspension or exclusion of contractors, the Conflicts Committee will consider such waiver requests on a case-by-case basis, but generally will not favor such requests where outside counsel are representing the FDIC in other than Routine Closed Institution matters. Such matters are not considered General FDIC Corporate & Regulations matters.
 

 



Last Updated 05/20/2005 legal@fdic.gov

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