Of all the controversial changes arising from America's new corporate-scandal-inspired Sarbanes-Oxley legislation, the one that lawyers like least is, yes, the one about lawyers. The Securities and Exchange Commission (SEC) is due to agree by January 26th the details of new rules requiring lawyers who learn of fraud or any breach of fiduciary duty at firms they work for to squeal until the breach is redressed, even if this means calling the SEC itself. Many corporate lawyers are aghast and fighting to soften the new rules. Currently, under cover of attorney-client privilege, all manner of rotten information that passes before lawyers can be kept confidential. According to lawyers, this allows candour and, thus, appropriate advice. This privilege has been written into state ethical codes for attorneys. The shield protecting lawyers from liability for dubious corporate actions was reinforced by a 1994 Supreme Court decision exempting lawyers from being guilty of "aiding and abetting" corporate fraud and by the 1995 Private Securities Litigation Reform Act.
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