Network Firm News
After Tyco, GCs Role Under Scrutiny
Scandals spark debate over legal and business duties
Otis Bilodeau -- Legal Times -- 09-26-2002
In the wake of the Tyco scandal, the ABA, ACCA and ethics scholars are re-examining the responsibilities of lawyers on the inside. Mark Belnick, the ousted general counsel of Tyco International Ltd., has been indicted by the Manhattan district attorney and sued by his former company and the Securities and Exchange Commission. His nightmarish predicament lends urgency to questions now being raised about the role of general counsel at corporations nationwide.
Some are questioning whether corporations should grant stock options to in-house lawyers. The argument is that stock options compel general counsel to buy in too much. They push GCs toward the measurable -- work that clearly impacts company profitability -- and away from work that makes the company healthy and not corrupt.
And, the ABA's Task Force on Corporate Responsibility is about to propose new rules related to the recent corporate scandals which could require every general counsel to report to both the chief executive officer and the board of directors, require regular meetings between the GC and the board in executive session, without the company's CEO present.
Finally, buried within the Sarbanes-Oxley Act of 2002, the recently passed corporate reform law, is a provision aimed at forcing corporate lawyers to be more proactive in alerting senior executives, and board members, to corporate malfeasance. The SEC is expected to issue proposed rules under that provision early next year.
Read more . . .
And see Corporate Lawyers Smell a Rat -- efforts to get in-house counsel to inform on their own employer
New York Lawyer -- September 26, 2002
Sarbanes-Oxley Act of 2002: What Corporate Lawyers Need to Know -- a seminar available on video.