Thursday, February 1, 2007
Posted by Alan Childress
Felix Bronstein, an associate at Sullivan & Cromwell in NYC (who apparently found out January 23 he got a nice raise--see, it pays to be a scholar), has posted to SSRN his brief 2003 article, "The Lawyer as Director of the Corporate Client in the Wake of Sarbanes-Oxley." It is also in 23 Journal of Law and Commerce 53 (2003). Here is his abstract:
The phenomenon of lawyers serving on their clients' boards of directors has been around for many years, as has the debate on its ethical implications.
This practice has both a number of advantages and disadvantages, but the advantages outweigh the disadvantages and, regardless, the decision should be left to the parties involved. However, the rules regulating the legal profession promulgated under the Sarbanes-Oxley will make such dual service harder to perform in practice. Dual service should be neither discouraged nor prohibited, because of its many benefits and its widespread practice. It is a decision that should be left open to fully informed lawyers, law firms, and clients. Sarbanes-Oxley will make life more difficult for all securities lawyers and hamper the operations and productivity of corporate America, and it will make life especially difficult for lawyer-directors in their dual service. Nonetheless, with extra precautions and full disclosure, lawyer-directors should be able to continue to perform their valuable services in appropriate cases