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See 17 C.F.R. § 240.21F- 4(b)( 4)(i)-(iii).
However, exceptions to these exclusions
allow a bounty if the disclosure was made
in order to remedy or stop a material
violation that could injure the company or
its investors, or in some circumstances if the
company’s officers and board have failed to
act on the information for over 120 days. See
17 C.F.R. § 240.21F- 4(b)( 4)(v).
Retaliation and Qui Tam Awards Under
the False Claims Act
The False Claim Act (FCA) imposes
liability on any person who receives federal
funds as the result of a fraudulent or false
claim for payment, or who avoids paying
the federal government funds through a
fraudulent or false representation. See 31
U.S.C. § 3729(a). The Act contains a Qui
Tam provision that allows private persons,
known as “Relators,” to prosecute violations
on behalf of the federal government. See
31 U.S.C. § 3730(b). The Act provides that
such Relators will receive an award equal
to 15 to 30 percent of the damages and fines
recovered in any Qui Tam action. See id.
The FCA also contains an anti-retaliation provision that bars any person
from retaliating against a whistleblower
who engages in acts in preparation to file
a Qui Tam claim, files a Qui Tam claim, or
attempts to stop one or more violations of the
FCA’s liability provisions. See 31 U.S.C. §
Generally, an in-house attorney may be
a Relator in a Qui Tam action against their
employer only if the ethical rules applicable
to that attorney would permit the disclosure
of the client’s confidential information in
such circumstances. See U.S. ex rel. Doe v.
X Corp., 862 F. Supp. 1502, 1508 (E.D. Va.
1994); U.S. v. Quest Diagnostics Inc., 734
F.3d 154 (2d Cir. 2013).
However, a whistleblower is protected
from retaliation under the FCA even if they
could not otherwise bring a Qui Tam claim,
so long as they engaged in efforts to stop a
violation of the FCA. Consequently, even
if an in-house attorney were barred from
becoming a Relator in a Qui Tam action, her
efforts to stop the violations of the FCA are
likely protected activity under the Act.
Unique Issues Regarding In-House Attorney Whistleblowers
Use of Protected and Privileged
One of the most unique issues in any
attorney whistleblower case is the extent
to which, or whether, the whistleblower
will be able to use the client’s confidential
information to prove her claims. The
American Bar Association (ABA) has
weighed in on this issue in an ethics opinion
discussing Rule 1. 6(b)( 2) of the Model Rules
of Professional Conduct1, which concluded
[t]he Model Rules do not prevent an
in-house lawyer from pursuing a suit
for retaliatory discharge when a lawyer
was discharged for complying with
her ethical obligations. An in-house
lawyer pursuing a wrongful discharge
claim must comply with her duty of
confidentiality to her former client and
may reveal information to the extent
necessary to establish her claim against
ABA Formal Ethics Opinion 01-424 at 5
(Sep. 22, 2001).
Model Rule 1. 6(b)( 2) and similar state
rules have led a “modern trend” towards
a more liberal view of allowing retaliatory
discharge claims by in-house attorneys,
even when such claims require the attorney
to use client confidences to prove the claim.
See, e.g., Willy v. ARB, 423 F.3d 483 (5th
However, courts in several states that
have not adopted the Model Rules often
hold that there are no (or very limited)
circumstances in which an in-house attorney
may use her employer’s confidences to prove
a whistleblower claim. See, e.g., General
Dynamics Corp. v. Superior Ct. of San
Bernardino, 876 P.2d 487 (Cal. 1994).
Retention of Documents
Another thorny issue in attorney
whistleblower cases is whether the
whistleblower can use the documents she
collected from her prior employer to prove
Generally, courts engage in a balancing
test to determine whether a whistleblower’s
acquisition, retention and dissemination
of documents were protected activity.
See Jefferies v. Harris County Cnty Action
Ass’n, 615 F.2d 1025, 1036 (5th Cir. 1980).
Several courts have applied the multi-factor
test laid out in Niswander v. Cincinnati
Insurance Co., which requires consideration
( 1) how the documents were obtained,
( 2) to whom the documents were produced,
( 3) the content of the documents, both in
terms of the need to keep the information
confidential and its relevance to the
employee’s claim of unlawful conduct,
( 4) why the documents were produced,
including whether the production was in
direct response to a discovery request,
( 6) the ability of the employee to preserve
the evidence in a manner that does not
Niswander v. Cincinnati Insurance Co.,
529 F.3d 714, 726 (6th Cir. 2008).
However, under both the False Claims
Act and the Dodd-Frank Act, the mere
act of collecting and retaining documents
can itself be protected activity. Under the
FCA, retention of documents has been
held to be protected activity under the
Act’s anti-retaliation provision, 31 U.S.C.
§ 3730(h). See U.S. ex rel. Yesudian v.
Howard University, 153 F.3d 731, 740 (D.C.
Cir. 1998). Similarly, Dodd-Frank and its
regulations appear to provide protection
for individuals who collect incriminating
documents and provide those documents to
the SEC to support a whistleblower claim.
See 17 C.F.R. § 240.21f- 4(b)( 1).
In-house attorneys are uniquely able
to identify and expose perceived wrongful
conduct by their employers. The questions
then become whether the whistleblowing
attorney has protection from retaliation and
whether she can even use her knowledge to
blow the whistle. Given the prevalence of
whistleblower statutes and the increasing
size of in-house legal departments, we will
likely continue to see these difficult and
unique issues arise.
1 Since the release of its Ethics Opinion, the ABA renumbered Model Rule 1. 6(b)( 2), as originally set forth in
1983, and it is now Model Rule 1. 6(b)( 5). See Model Rules
of Prof’l Conduct R. 1. 6(b)( 5) (2003).