Report of the New York City Bar Association Task Force on the Lawyer's Role in Corporate Governance—November 2006 [Excerpted for Publication in The Business Lawyer]

摘要

The subject of the lawyer's role in corporate governance is a complex matter. The "right answers" are not susceptible to empirical proof. No one can speak with confidence, at any level of generality, concerning the involvement (or non-involvement) of lawyers with the recent prominent corporate frauds. The shroud surrounding attorney-client dealings, a product of the attorney-client privilege and confidentiality obscures such facts with respect to many alleged frauds. Nor is it possible to muster empirical proof to demonstrate that preserving confidentiality is essential to the optimal functioning of the attorney-client relationship. Reiving as we must on our own experience, the observations of practitioners, regulators and commentators we respect, and common sense, we do believe that any "reform" undermining the confidential nature of a lawyer's relationship with his or her client would represent an overreaction to the recent scandals and a cure worse than the disease. Nonetheless, there ought to be a new determination by the corporate bar to play its proper role as confidential advisor counseling compliance with the law—and conduct exceeding its minimum requirements—in a clear and forthright manner. We believe our recommendations of best practices should be helpful in facilitating the effective performance of this role. Clear advice, including escalating a problem up the corporate hierarchy when necessary, should obviate almost all serious potential violations of law coming to a lawyer's attention. No lawyer should knowingly acquiesce in client conduct clearly violating the securities laws, whether or not the lawyer's services are directly implicated in the wrongdoing. Reporting up often will be obligatory in such an instance under the SEC lawyer conduct rules and the ABAs Model Rules. Those rules also permit withdrawal and, depending on the circumstances, may also permit reporting out if reporting up fails to end the wrongdoing. A lawyer should not shrink from those actions, if confronted with the rare circumstances that warrant them.