Good News for Boards

An article at law.com (http://www.law.com/jsp/ihc/PubArticleIHC.jsp?id=1184749593213) is reporting that more and more lawyers are sitting on corporate boards again. Many declined to be involved with boards after Sarbanes-Oxley in 2002. The Sarbanes-Oxley Act expanded liability for board members with conflicting interests. Thus, many attorneys were worried about liability exposure if sitting on the board of their firm's client. (This would be particularly troublesome for attorneys in some of the nation's largest firms which also have long client lists.)

So why is this a good thing? Lawyers on boards can add wisdom to corporate governance and internal investigation issues that non-lawyers may not have. Boards of directors can help lawyers gain better understanding of business acumen, thus making them more effective in helping their clients. (Indeed, for this reason, it makes sense for lawyers to sit on the boards of their clients.)

There are, of course, still risks for attorneys who want to sit on client's boards. Many attorneys are concerned about their ability to provide unbiased advice to these companies, or even just the appearance of unbiased advice. The article gives an example of a board member/attorney who supported a takeover of the company. Another board member accused him of having a conflict of interest because the firm would earn extra fees during the takeover. It is also likely that insurance premiums (either for directors' and officers' liability insurance or malpractice insurance) will rise.

While the advantage of having an attorney on a company's board is clear, attorneys still need to be cautious when deciding whether to serve on a client's board. I would definitely argue that the benefits outweigh the risks.