Contacts John Beavers, Kevin Kinross or Jeffrey Smith

Importance of Independent Counsel

Boards and their committees as well as executives of public reporting companies often need independent advice as to their legal rights and obligations as directors or executives. As a result of the Sarbanes-Oxley Act of 2002 and related SEC proposed rules, any advice given by any company counsel, whether of the company’s in-house staff or its outside law firm, cannot be protected by any attorney-client privilege or accorded confidentiality in favor of the board, committee, any of their members, or any executive. Under SEC proposed rules, any such company counsel has “up-the-ladder” reporting obligations that can include notification to the SEC.

In order to ensure the protection of the attorney-client privilege and the confidentiality of communications, boards and their committees should have the advice of counsel that is independent of company counsel whenever necessary to assess their legal rights and obligations as directors. Likewise, executives should have the advice of independent legal counsel whenever necessary to assess their legal rights and obligations as executives. Independent counsel is accorded such importance by the Sarbanes-Oxley Act that it requires the company to provide funds for counsel’s fees and expenses. Counsel for BOARDS AND EXECUTIVES has extensive experience serving as independent counsel.

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