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
state of the law, unsettled in several areas, as a matter of background (see
Full Report at pp. 30-50).
Ethical rules are the second source, the breach of which can subject a
lawyer to disciplinary charges and, possibly, liability claims based on departures
from customary professional standards. These rules form the backdrop
for recommendations in this report (see pp. 51-56) In addition, we
advance some specific recommendations for New York in this area, namely
that it embrace a series of 2003 amendments to the Model Rules of Professional
Conduct (“Model Rules”) of the American Bar Association (“ABA”)
that speak to the lawyer’s responsibilities when confronted with violations
of law affecting her client (see Full Report at pp. 72-96).
The third source consists of suggestions, neither ethically nor legally
mandated, of “best practices,” i.e., recommendations to help lawyers steer
their public company clients away from fraudulent or illegal behavior, or
conduct that approaches perilously close to the line separating right from
wrong. We advance best practice recommendations below for General Counsel
and other in-house lawyers, for outside counsel and for law firms as institutions,
and also for lawyers dealing with auditors and financial disclosure
issues and, finally, for lawyers conducting internal investigations (see
Full Report at pp. 96 et seq.).
EXECUTIVE SUMMARY OF RECOMMENDATIONS
A lawyer’s legal duties: confidential advisor to clients
The subject of the lawyers’ role in advising public companies has been an
active subject of debate for many decades (see pp. 30-40, below). It has received
heightened focus as a result of the spate of recent major corporate
scandals, which have again raised the oft-asked question, “where were the
lawyers”, i.e., why were such scandals not averted by either inside or outside
lawyers The Task Force reviewed the available public record concerning nine
recent scandals in an attempt to answer this question on an empirical basis.
Our conclusion, necessarily a tentative one absent definitive fact-finding,
is that lawyers, either in-house or outside, appear to have been strategically
positioned with respect to a significant number of these scandals.
Though not necessarily culpable in any actual wrongdoing, a matter for
determination by courts or other tribunals, lawyers often were sufficiently
familiar with aspects of client conduct later alleged to have been fraudulent
to have asked questions about that conduct. They appear to have
affair, see Roger C. Cramton, Enron and the Corporate Lawyer: A Primer on Legal and Ethical
Issues, 58 Bus. Law. 143 (2002).
T H E R E C O R D
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