Ross Commits Wisdom on Ethics, How to Avoid 'Club Fed' to New Book


Michael C. Ross '77, a Law School lecturer and alumnus, authored a new book titled "Ethics & Integrity in Law & Business — Avoiding 'Club Fed.'"

October 19, 2011

In a tough economy, it may be difficult for lawyers to champion ethical behavior, but the wisdom of conducting business ethically should be clear if you carefully weigh the benefits and costs, University of Virginia School of Law lecturer and alumnus Michael Ross '77 illustrates in his new book.

"People generally overvalue benefits and undervalue the risk of detection and the consequences of getting caught," said Ross, whose book, "Ethics & Integrity in Law & Business — Avoiding 'Club Fed,'" carries a similar name to the seminar he teaches law students at Virginia and the University of California, Berkeley.

Ross has plenty of experience in high-stakes corporate ethics. He retired in 2000 as the senior vice president, general counsel and secretary of Safeway Inc., and before that was a partner at the law firm Latham & Watkins, where he specialized in corporate mergers and acquisitions.

At Safeway he was the grocery chain's de facto compliance officer and oversaw the training of employees to conduct business legally and ethically. At the time he retired, corporate scandals — including the implosion of Enron — were making headlines. He devised his ethics course, which is an intensive short course sponsored by Virginia's Program in Law & Business, not long after.

"Because the prospect of raising ethics issues with your boss or your partner or a client is so off-putting — because it is so awkward and can lead to a rift in, or an end to, your relationship, a loss of your job, a failure to get a promotion, a decrease in compensation — many people shy away from doing anything," he said.

That may be particularly true for lawyers today, who work in a legal industry hit hard by job losses. Lawyers face special pressures, Ross said, because society holds them to high standards. They also have to be concerned with their colleagues' conduct because they are required to report certain ethical violations.

Ross' new book carries a similar name to a seminar he teaches to law students at Virginia and the University of California, Berkeley.

"That really runs counter to what we grow up with, where we do not 'rat' on our friends and colleagues. This is very difficult, and I suspect there are a lot of people who do not take the professional obligation seriously," Ross said.

Lawyers often face complex ethical questions, and relying upon merely obeying the law may not be enough, Ross said. Even very competent attorneys may not know about a law or understand it completely because some laws are very technical, even counterintuitive. Other laws or precedents may be unclear or confusing.

"Judicial decisions and law firm opinions may differ," Ross said. "Enforcement policies may change. Even if a lawyer knows and understands the law perfectly, he or she may not know all the facts.

"It's easy to sit back from a distance and say 'Well, that is not ethical, it is against the rules, we should not do it,'" he said. "It is much more difficult in practice when something comes up and we have to do something or not do something quickly."

Ross said his book, which is laced with humor and uses real-world situations from his own experiences and from those in media accounts, aims to "arm the students with practical steps they could take and practical arguments they could make that might get people to conduct business ethically, whether it is lawyers in their firm or their client or others."

Ross said his book and seminar explore strategies to address ethical concerns in a way that may not hurt the lawyer's career. Getting colleagues to share ownership in an issue, working with a mentor or colleagues, suggesting alternative courses of action and using creative arguments can help lawyers persuade others that the "long-term consequences outweigh the short-term benefits."

The ethical dilemmas lawyers might confront include pressure to pad their hours or account for their time in a way that may not be accurate because a client will not pay for certain tasks, Ross said. Attorneys also face a host of ethical concerns outside of those involving human resource issues, such as conflicts of interest. Some involve the conflicting interests of the lawyer or law firm and the client; others involve competing interests of different clients. Spotting and effectively managing conflicts are critical, Ross said. Failure to do so may lead to serious consequences, such as disqualification of the law firm from the case, suspension or loss of the license to practice, loss of clients and malpractice claims.

"If we do a cost-benefit analysis and limit the costs and benefits to those which affect only us, the analysis is incomplete," he said. "To use this sort of analysis to reach an ethical decision, we should evaluate the costs and benefits — and usually it is costs — to the other people who are affected, that is, the client, the opposing party, the court system, the public, the profession."

When making decisions, attorneys should also factor in whether their behavior appears ethical.

"It may be legal but not ethical," he said. "What is this going to look like to others?" He emphasizes that acting on the assumption that no one will know" is usually a big mistake.

Ross, who also used to teach a practical mergers and acquisitions seminar at the Law School, has taught a shortened version of his ethics course at the Peking University of Transnational Law in Shenzhen, China and plans to teach the business portion of it at Dubrovnik International University in Croatia.

He may have to explain the term "Club Fed" to his foreign audience, but the message is the same.

"Lawyers are well-advised to have a 'cushion' or 'buffer' of ethics when they are deciding how to conduct business and how to advise their clients," he said.

Founded in 1819, the University of Virginia School of Law is the second-oldest continuously operating law school in the nation. Consistently ranked among the top law schools, Virginia is a world-renowned training ground for distinguished lawyers and public servants, instilling in them a commitment to leadership, integrity and community service.

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