2007 Issue 1 - New York City Bar Association

L A W Y E R ’ S R O L E I N C O R P O R A T E G O V E R N A N C E
broad subject through interviews with many knowledgeable lawyers (government,
in-house and law firm), 2 analysis of the publicly known facts
concerning recent corporate scandals, review of relevant case law and ethical
standards, and survey of the extensive relevant literature. 3 In addition,
the Task Force conducted a CLE program at the Association on February
28, 2006, and conducted an open hearing at the Association on May
9, after posting its preliminary draft recommendations on the Association’s
website. After the May 9 hearing the Task Force received written comments
from other Association committees, business and professional associations,
and practitioners. The Task Force’s full draft report was submitted
for comment to relevant Association committees. This final report
incorporates some, but not all, of the comments in the two letters received
that took issue with points made in the draft. 4
The Task Force’s focus has been on public companies, not privately
held firms. 5 Further, with the exception of internal investigations, the
three of whom were formerly on the enforcement staff of the Securities and Exchange Commission
(“SEC”), four transactional lawyers, and one expert in legal ethics); two plaintiffs class
action attorneys; two professors of law specializing in corporate law and legal ethics, respectively;
three government attorneys; one federal judge; one general counsel to a major auditing
firm; and one non-attorney who has served on the audit committees of two public companies.
2 . The interviewees included two former SEC Commissioners (Richard Breeden and Harvey
Goldschmid) and present and former SEC Directors of Enforcement (Stephen Cutler and Linda
Thomsen). Appendix A to the Full Report lists the individuals interviewed by the Task Force or
its various subcommittees. These interviews were conducted with the understanding that no
remarks would be attributed to specific speakers, in order to encourage free and open discussion.
Individuals are cited in the report only with respect to statements already in the public record.
3. Appendix B to the Full Report is a Table of Authorities for this report. These authorities, to
the extent not generally available, will be on file at the Association.
4. Not all members of the Task Force endorse each recommendation and every view expressed
in this report, but the report taken as a whole reflects a consensus of the members of
the Task Force.
We note that some prior reports issued by Association committees have taken positions that
differ from certain of our recommendations, such as on whether a lawyer should have the
right, as a matter of ethics, to report out a threatened client financial fraud. We believe such
changes in position, following similar changes by the ABA implemented by 2003 amendments
to its Model Rules, are warranted given the many recent significant corporate scandals,
the resulting heightened focus on the lawyer’s role in corporate governance, and the mandatory
reporting up provisions of the SEC’s lawyer conduct rules promulgated in 2003 under the
Sarbanes-Oxley Act (see p. 22, below).
5. As used in this Report, the term “public company” means generally a corporation that has a class
of stock sufficiently widely held as to require registration under Section 12 of the Securities Exchange
Act of 1934 (the “1934 Act”) or the filing of reports pursuant to Section 15(d) of that Act.
T H E R E C O R D
166