|  | | 2006 News and Press Releases | | |
HEADLINE NEWS:
GCs' Power Gains Also Mean More Exposure; As General Counsel Take On Larger Roles In Their Companies, They Are More Likely To Become Targets In Investigations
Peter J. Henning
Law.com. December 8, 2006
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EXCERPT: The Sarbanes-Oxley Act and the demand for greater corporate compliance have effectively empowered general counsel and their law departments. Businesses, especially publicly traded companies, can no longer afford simply to react to problems once they come to management's attention. Instead, companies need to vet decisions in advance and even seek the imprimatur of the corporate lawyer to establish a proper system of internal controls. Corporate compliance programs often require that company lawyers get involved at the outset following a report of possible wrongdoing, and lawyers frequently take charge of any significant investigation. However, as general counsel gain in stature inside the company, so too their possible exposure to enforcement actions and criminal prosecutions grows. Inclusion in the inner circle of executives brings with it the risk of being co-opted in a course of conduct that can range from changing the date for options awards to fudging paperwork showing when contracts are finalized in order to permit the booking of revenue. Unfortunately, the pressure on executives to be one of the "team" can overwhelm a lawyer's ability to render neutral legal advice against a decision. General counsel caught up in options backdating or flawed internal investigations may have been drawn into doing what their fellow executives wanted rather than what a detached lawyer would tell the corporation to do. In-house attorneys must beware: The increased role of corporate lawyers in an organization's business does not change the government's perception of what is appropriate for a gatekeeper who must prevent misconduct. Lawyers should bring a measure of detachment to their jobs, giving dispassionate legal advice that may not be what managers of a business want to hear. |
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