> Mr. Balwani replied the next day, copying in Ms. Holmes. “I am extremely irritated and frustrated by folks with no legal background taking legal positions and interpretations on these matters,” he wrote. “This must stop.”
Wow. What a terrible response to get from company leadership. It should be completely appropriate for an employee to bring a concern to the attention of leadership based on a plain-English reading of a statute or regulation. Obviously, I don't know what kind of email the person sent, but if it was something like, "A plain English interpretation suggests that we are required to ... " then the right response is to thank them for bringing it to attention, and then engage people for an appropriate review. Every time I've dealt with a legal situation in a corporate environment, the plain English reading was ballpark a correct way to understand it, with occasionally some detailed nuances for which it was important to have legal input, but which did not radically change the situation. I've never run into a case where the required action was opposite than it seemed, or anything like that, although I'm sure surprising things come up from time to time.
I understand why they might ask people to stop discussing it, on a big company email list or something like that, but bringing it to the attention of the appropriate company leader, is exactly the right thing to do. Thank them and look into it.
Without seeing the full emails, I'm hesitant to judge. The excerpt sounds reasonable, but for all we know, the subject line could've read, "WHAT WE ARE DOING IS WRONG!"...I thought company lawyers generally frown upon speculation of legal matters via email. Not necessarily to stamp out internal and genuine complaints, but because they end up being a rich source of material to be taken out of context should litigation come up...that said, Mr. Balwani probably should've kept that in mind before writing something that appears quite dickish when excerpted in an investigative news report.
The other parts of Theranos's media strategy, according to the WSJ, doesn't seem particularly friendly:
- Threatening to sue a widow whose Theranos-employed husband expressed doubts to her before killing himself.
- Going around to people who had been interviewed by the WSJ and asking them to sign statements (before the story was even published) that the WSJ had misquoted them.
- Holmes ignoring WSJ for _five months_. Then standing them up last week. The CEO is famous for being an inspirational, thoughtful speaker but can't even make time in _five months_ to give a bland statement of defense or explanation to the Wall Street Journal, on a story that strongly hints at violations of federal health regulations? It's one thing to refuse comment when a news organization ambushes you the night of the deadline -- it's inexcusable to hide for five months..._especially_ if the company isn't actually doing anything wrong.
True. Concern about legal issues is what leads one to consult counsel in the first place typically though. Counsel discourages speculation by people who aren't involved and aren't the right people to be discussing it - like they've read a news article. I haven't heard anyone discourage genuine inquiry into a specific issue they're concerned about, and that it's appropriate for them to raise. It sounds like the employee had specific knowledge about an aspect of the company's operations. The word speculation is used a lot in that context, but every piece of legal advice I've ever received (outside of impersonal training) started with me thinking: it seems like this might be a problem ... I wonder if it's really a problem or not ...
Counsel also gives training about when to ask for legal advice and how to handle privilege and confidential communication, which doesn't sound like were followed here (or maybe never provided). As you say, it could be a liability during litigation. However, the response to that could have been "I've added our legal team for input on the issue you've raised. Please don't discuss legal issues except in privileged communication with our legal team." I guess that's easier to say and do when you have inhouse counsel. -g-
I would also hope that a thread like that would be deemed to be protected by privilege if counsel were immediately added like that as part of a request for legal advice. Perhaps someone more familiar with the boundaries of privilege could comment. From what I understand though, opposing counsel are usually pretty hesitant to attempt to pierce privilege, especially if there's a tinge of legitimacy on it. E.g., random guy raises legal concern to superior, who immediately involves counsel. Opposing counsel has to actually attempt to make the case that it's not privileged communication, which they are reluctant to do in such cases (but doesn't mean it can't happen).
Wow. What a terrible response to get from company leadership. It should be completely appropriate for an employee to bring a concern to the attention of leadership based on a plain-English reading of a statute or regulation. Obviously, I don't know what kind of email the person sent, but if it was something like, "A plain English interpretation suggests that we are required to ... " then the right response is to thank them for bringing it to attention, and then engage people for an appropriate review. Every time I've dealt with a legal situation in a corporate environment, the plain English reading was ballpark a correct way to understand it, with occasionally some detailed nuances for which it was important to have legal input, but which did not radically change the situation. I've never run into a case where the required action was opposite than it seemed, or anything like that, although I'm sure surprising things come up from time to time.
I understand why they might ask people to stop discussing it, on a big company email list or something like that, but bringing it to the attention of the appropriate company leader, is exactly the right thing to do. Thank them and look into it.