|  | | 2007 News and Press Releases | | |
HEADLINE NEWS:
Road Map For Insurance Coverage, In today's regulatory world, what is the safest course?
Susan F. Friedman
New York Law Journal. December 20, 2007
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EXCERPT: IN REFLECTIONS on 2007, the view from the rear window showed claims against in-house counsel pertaining to stock options backdating, fraud, discovery abuses, lying to investors and auditors, insider trading, litigation misconduct, violations of securities laws, Medicare and Medicaid fraud including violations of the False Claims Act, [FN1] e-discovery errors, corporate governance violations, intellectual property and trade secret issues, as well as general allegations of legal malpractice. The road for some in-house attorneys ended with punishments ranging from prison sentences and fines to reprimands, suspension and disbarment. Just as in-house attorneys believed that it was safe to go back on the road, in March 2007 the Securities and Exchange Commission commenced an action against two former in-house attorneys of Enron alleging violations of federal securities laws by making material misrepresentations in public filings for Enron and omitting material disclosures, all of which was part of the scheme to defraud investors. [FN2] The trip through 2007 continues with new issues emerging including power struggles between chief legal officers and chief compliance officers. Recall earlier this year where general counsels were held personally liable for adopting compliance plans in violation of federal regulations governing compliance. We also see the growth of the U.S. government's reach with respect to global practice in general. In 2007 there has been a heightened interest in international money laundering as well as antitrust violations committed by foreign executives which all may ultimately impact in-house counsel. In this same lane, as the Sarbanes-Oxley Act of 2002 [FN3] gains traction in the United States via proof of its successful results, these same types of regulations may be implemented in other parts of the world as well as other U.S. industry sectors such as nonprofit organizations. Certainly from a practice perspective, in addition to new compliance and discovery rules, more attention has been given to global warming and disclosure requirements. Further, the subprime meltdown and the new threat of unstable corporate debt may be setting the speed limit for the highway ahead. … A fair number of in-house counsel, who were also officers of their employers, sought refuge in their directors and officers liability insurance policies (D&O policies). Many, however, found themselves in a gray area when advised that these insurance policies were not designed to address claims of legal malpractice, nor did boards of directors want to share their limits of liability with in-house counsel for legal malpractice claims. In the face of a myriad of new and existing exposures, potential corporate insolvency, personal liability, and regulatory road rage, a separate stand- alone insurance policy for in-house counsel has gained appeal. This article highlights the mechanics of a standard insurance policy for in-house counsel, commercially known as employed lawyers professional liability insurance or employed lawyers policies. |
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