G. Lawyer Representing Entities/Organisations Flashcards
Who does Lawyer owe duty of loyalty to?
Organisation
NOT Organisation’s people (Constituents)
- Stockholders
- Officers
- Directors
What if there is conflict of interest between Organisation and Constituents?*
Lawyer must warn Constituent its representation of Organisation, NOT Constituent!!!
- Must withdraw from Constituent representation!!!
- Must keep info re Constituent confidential!!!
UNLESS conflict of interest rules are satisfied
When must Lawyer protect Organisation’s interests?*
If Constituent advocates action that may cause substantial injury => Lawyer must protect Organisation’s interests (to reasonably necessary extent)!!!
- Report to higher authority (within Organisation)!!!
- Otherwise => Report to highest authority (within Organisation)!!!
- Otherwise => Report to outsiders (NOT within Organisation)!!!
- UNLESS hired by Organisation to investigate/defend vs alleged violation of law => NO reporting to outsiders allowed
When must Lawyer NOT act as both Advocate and Director?
Dual role may create conflict of interest
Dual role will compromise Lawyer’s professional judgment
What must Securities Lawyer do if he becomes aware of evidence that Client is materially violating federal/state securities law?*
Report evidence to Client’s Chief Legal Officer (CLO)!!!
- CLO must take all reasonable steps to ensure Client makes ‘appropriate response’ (stop/remedy violation)
If Lawyer believes CLO did NOT achieve appropriate response from Client => Lawyer must report evidence to Client’s Board/Audit Committee/Outsiders Committee!!!
FYI Evidence means ‘credible’ evidence!!!
- NOT gossip!!!
- NOT hearsay!!!
Is Securities Lawyer required to reveal confidential info to SEC? Under what circumstances?
NOT required (ONLY permitted)!!!
Reasonably necessary to;
- Stop Client’s violation causing financial injury to Client (even if State’s law states otherwise, as pre-empted by SEC regulations)!!!
- Stop Client perjuring in SEC matter/any matter within Federal Gov’s jurisdiction
- Rectify financial injury if Lawyer’s services were used to further Client’s violation
Are there consequences for Securities Lawyer’s compliance with Sarbanes-Oxley rules?
NO civil liability
NO subject to discipline (under inconsistent state rule)
Are there consequences for Securities Lawyer being fired despite compliance with Sarbanes-Oxley rules?
Securities Lawyer may report firing to Client’s Board
- Create expensive wrongful termination suit vs Client
