This is one outlet's own report from Fortune — the article as it was filed.
AIPROPX ReportFortune · 3h ago
Randall Lane probably didn’t break the law by accepting $6 million while working at Forbes, but he may still pay a price under a…
Forbes fired its longtime chief content officer, Randall Lane, in July after discovering he had received an undisclosed payment of about $6 million from RJ Shook, the founder of Shook Research, a firm that has partnered with Forbes since 2016 to publish its rankings of top wealth advisers. Lane, 58, worked at Forbes for 15 years and had overseen the magazine’s editorial operations since 2017. The law says Lane may get away with it, too—unless Forbes sues him. Lane has described the payment as a personal gift, unconnected to his work, thanking him for years of informal advice he gave Shook after the two men met on a Forbes-organized humanitarian trip to Liberia in 2013. “I made a mistake, and I take responsibility for it,” Lane told the New York Times , which first reported his firing. “I should have disclosed the gift, and failing to was a serious error in judgment.” The payment came to light only because Shook sold a majority stake in his company to the private equity firm PPC Enterprises last August, and PPC’s staff found a record of the $6 million payment while reviewing Shook Research’s email correspondence after the deal closed. Shook’s new management flagged it to Forbes, which confronted Lane in July. He acknowledged the payment and was fired.
A Forbes spokesperson told Fortune : “When this undisclosed conflict of interest was brought to our attention, we examined the situation closely and took the appropriate action immediately. We will not comment further per company policy regarding the confidentiality of personnel information and other considerations. We have a strong editorial leadership team in place, including Kerry Lauerman, Executive Editor, Forbes, who is overseeing editorial operations in the interim. Forbes remains focused on delivering trusted journalism and world-class storytelling across our platforms.”
A faithless servant doctrine
But the more interesting question, legally, isn’t whether Forbes was justified in firing Lane. It’s whether Lane broke any criminal law, and the answer, according to one employment attorney, is probably not. What he likely violated is a New York common-law doctrine dating back more than a century that requires employees to remain loyal to their employers.
Richard Friedman, an employment attorney who negotiates contracts and separation agreements for executives, said Forbes was within its rights. “I believe he was properly terminated, based on what I’ve read,” Friedman said.
Friedman said Forbes’ employee handbook—which, according to the Times, requires staff to seek permission before engaging in outside business activities and bars personal gain from company relationships—likely functions as a binding contract. “Employee handbooks have been upheld as contracts because the consideration is the ongoing employment,” he said.
But Friedman said Lane’s obligations to Forbes didn’t depend on any handbook at all. “Employees owe fiduciary duties to their employers,” he said, “wholly apart from written policies contained in employee handbooks or otherwise.”
Friedman pointed to New York’s “Faithless Servant” doctrine, a common-law theory on the books for over 140 years that allows employers to recover compensation from employees found to have acted disloyally. Courts, he said, have found disloyalty “can cover a wide range of conduct, including fraud, gross negligence, embezzlement, misappropriating trade secrets, and other behavior viewed as detrimental to the company, as well as making material misstatements or omissions with respect to the company’s financial posture.”
How far back that recovery can reach has varied from case to case. “Under the faithless servant doctrine, employers will sometimes take the position that the entire compensation paid to the employee from the inception of employment is subject to clawback,” Friedman said of the doctrine that was invoked as early as in two court cases dating from 1885 and 1886. “In other cases, employers have only sought disgorgement of the compensation paid during the period of disloyalty.”
Friedman said the danger of a payment such as the one made to Lane is that it could impact, or create the appearance of impacting, the decisions an executive makes vis-à-vis the person or entity that made the payment. “If I’m expecting to receive or have received a substantial payment such as $6 million from a business partner of my employer, I may choose to increase the contractual relationship with that company,” he said. “I may choose to award it a lucrative contract without soliciting bids, I may choose to pay them a higher fee than the market requires, or I may choose to be more generous with that company when allocating revenue between the two companies.”
“You can only have one master. If I’m an employee, I owe my duty to my employer.” Lane, he said, “owed his duties exclusively to Forbes, as opposed to Forbes and also his apparently good friend Shook.”
A gift, or a business expense?
“It would appear that Forbes has a written policy which requires Lane to seek permission to accept the offered payment,” Friedman said. He sketched out what that disclosure could have sounded like: “Listen, I’ve had this long-standing friendship for 13 years with Shook. He’s offered to make a substantial gift to me. I think it’s very generous of him and unnecessary, but I certainly would appreciate it, and I don’t see any impropriety. But I wanted to let you know in advance and hopefully confirm that I can accept the gift.”
Of course, Forbes could have declined the request. If Lane had complied and Forbes said no, he wouldn’t have gotten the $6 million, but he still would have his job.
Randall LaneForbesA New YorkRJ ShookShook ResearchLaneShookLiberiaNew York TimesPPC EnterprisesPPCA Forbes
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