Monday, August 10, 2015

Business and Boards Bring Conflicts (or at Least Concerns)

Interesting story via The Legal Intelligencer: "Law Firms Have Reined in Partner Board Memberships" --
  • "Board memberships have often been touted as great ways for attorneys to give back to the community and generate business contacts, but a recent situation involving Bill Cosby's defense counsel doubling as the chairman of Temple University's board highlighted why some firms have put tighter scrutiny on board affiliations."
  • "Law firm leaders have said their firms have exercised more control over the past several years to which boards partners are joining and whether anything involving existing board memberships could prove embarrassing enough to the firm that the partner should step down from the board."
  • Anthony E. Davis, a partner at Hinshaw & Culbertson in New York, advises attorneys and law firms on legal professional and ethics issues. He said there is no 'one-size-fits-all' approach to attorney participation on boards of directors."
    • 'There are certainly some firms out there that take what we might call an entrepreneurial approach and think it's great for lawyers to be on boards," Davis said. But "many firms are shying away from it now because of the very serious conflict of interest and other risks.'"
      "There could be several reasons behind such a hesitation, he said. Lawyers may find that their different duties as a director and as an attorney create complicated situations, or they may encounter a conflict if an attorney's firm wants to do legal work for the entity he or she is serving."
  • "Eckert Seamans Cherin & Mellott CEO Tim Ryan said his firm has had a board-membership policy in place for about a decade.'Part of that is to ensure that we can track what boards our lawyers are part of for conflict purposes, but also to make sure, in appropriate cases, the lawyers are provided with insurance for their board participation,' Ryan said. The firm has to notify its insurance carrier of board participation that is not covered by the external organization's insurer. In that case, Eckert Seamans' insurer will offer coverage, Ryan said."
  • "Dechert has a policy requiring a committee's approval of any request for a partner to serve on a for-profit corporation's board. There is a similar requirement at Saul Ewing where executive committee permission is required for for-profit board service."
  • "'There are ethical considerations, potential conflicts of interest, and D&O liability coverage issues that all must be considered and discussed prior to accepting such a position,' a Saul Ewing spokeswoman said. 'We have partners who serve on for-profit boards, but we want to ensure they consider all of the potential ramifications before making that commitment.'"

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