The United States has scores of laws relating to whistleblowing. Most of these laws prohibit retaliation against employees who report wrongdoing (whistleblower protection), while a few provide financial incentives for those who report wrongdoing (whistleblower incentives).
Whistleblower protection laws have generally been ineffective. Whistleblowing can produce career-ending consequences, and the remedies available under these laws are modest by comparison. Judges have construed these laws narrowly. Whistleblower incentive laws, on the other hand, have unquestionably elicited thousands of external disclosures and produced billions of dollars in recoveries for false claims against governments. The United States has recently expanded the availability of financial incentives for whistleblowers beyond the False Claims Act to tax and securities fraud.
This paper examines whether the financial incentives that are generally available to certain classes of whistleblowers are -- and should be -- available to lawyers who blow the whistle on their clients’ misconduct.
Legal ethics scholars are familiar with the plight of in-house lawyers who have been fired after blowing the whistle on their clients’ misconduct. Court decisions arising out of these cases have spawned dozens of law review articles and have become classics of the legal ethics canon.
Nearly all of legal scholarship about whistleblowing lawyers focuses on two questions: whether these lawyers violated their ethical obligations and whether those who suffer retaliation can avail themselves of the protections offered by whistleblower statutes or related common law doctrines.
But in recent years, the most dramatic developments in the law of whistleblowing have involved financial incentives rather than whistleblower protection. While most courts have allowed lawyers to pursue whistleblower protection claims (albeit with heightened evidentiary requirements), different policy concerns come into play when a lawyer seeks a financial reward for revealing information about her client. These financial incentives may undermine the loyalty of lawyers who uncover information about possible wrongdoing. Eyeing the potential for a significant payout, lawyers may be less likely to blow the whistle internally, or less likely to do so in a manner that would actually be effective.
By exploring how the law addresses this issue of whistleblower incentives, one can discern competing visions about the role of loyalty and personal gain in motivating lawyers and employees more generally.