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Whistleblowers Now Need a Lawyer More Than Ever

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A story “Hazy Future for Thriving S.E.C. Whistle-Blower Effort,” in the New York Times on April 24, 2013, http://dealbook.nytimes.com/2013/04/23/hazy-future-for-s-e-c-s-whistle-blower-office/?src=dlbksb, notes recent changes in corporate employment policies that greatly increase the need for potential whistleblowers to be represented by counsel, whether they intend to report directly to a government agency or internally through their own employer.

The article notes a growing trend among corporations to require internal reporting of whistleblower claims and to limit or prevent internal whistleblowers from receiving awards. Other provisions recently imposed require employees to certify each year, or when they leave the company, that they are unaware of any misconduct, a provision that would tend to discredit the whistleblower should he subsequently report to the SEC or another agency. Moreover subtle language is being added to severance agreements that may effectively prevent former employees from making claims about their employers after they leave.

Many of these corporate efforts to limit potential whistleblowers would likely violate the anti-retaliation provisions of Dodd-Frank, Section 21F of the Exchange Act, Section 21F(h), if attempted on an ad hoc basis against individual whistleblowers. Corporate lawyers now seem to believe that if they impose these potentially retaliatory provisions on all employees as a condition of employment or in standard employment and severance agreements, they can achieve the same effect and subject all potential whistleblowers to draconian penalties should they decide to speak out about illegal behavior they have seen. Hence, the increased need for informed legal representation before blowing the whistle, even for insiders who believe they have an obligation to report the problems they have seen to their own companies. Experienced whistleblower attorneys are best suited to provide that advice whether they represent the whistleblower on the claim or only provide advice about the best way to proceed with the potential whistleblower’s employer.

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