NCPA - Daily Policy Digest - New Law Holds Attorneys More Accountable

NATIONAL CENTER FOR POLICY ANALYSIS
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New Law Holds Attorneys More Accountable

This week, the American Bar Association (ABA) blessed changes that could help prevent future scandals. The nation's largest lawyers group voted to allow attorneys to report corporate fraud -- which some had argued was barred by attorney-client confidentiality.

The role of lawyers in recent corporate scandals still is being unraveled. But Congress, shareholders and numerous law professors have questioned attorneys' actions:

One top Houston law firm is being sued by former Enron shareholders who charge that it approved the legality of improper deals.

A court-appointed examiner in Enron's bankruptcy is probing the role of more than 40 law firms in the corporation's demise.

Congress was so concerned about lawyers' failure to report corporate irregularities that it required the Securities and Exchange Commission (SEC) to pass a new regulation:

It requires securities lawyers who spot crime to report it to corporate directors.

The SEC also is considering a stronger rule requiring lawyers who discover fraud to resign, triggering a report to the SEC.

In pushing for the law, Sen. John Edwards, D-N.C., himself a lawyer, argued that some members of his profession forgot they were working for the shareholders who own a corporation and "not their pal, the CEO."

Source: Editorial, "Hold lawyers accountable in corporate fraud scandals," USA TODAY, August 15, 2003.

For text
http://www.usatoday.com/news/opinion/editorials/2003-08-14-our-view-usat_x.htm

For more on Business Law
http://www.ncpa.org/iss/leg/

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