IX. Should Code of Professional Responsibility Forbid Lawyers to Serve on Boards of Corporations For Which They Act as Counsel

Our next topic for discussion is : should outside general counsel of a publicly corporation serve on the board of directors of that corporation. I suppose the firm's quick answer to that question might be, If one of our partners doesn't, some other lawyer will. Thus, I want to reformulate the question to ask: should a provision be added to the Code of Professional Responsibility which would state that it is unprofessional for counsel to a company to serve on the board of publicly company he advises. That kind of a provision would require a definition of the amount of legal work which a lawyer or law firm could do for the company before the prohibition is triggered. I have also narrowed the question from company to any publicly held company. Finally, in light of the fact that we talked last night about the problems of board service from the point of view of inside counsel, I would devote my primary attention to the questions raised by outside counsel serving on the board. From a purely selfish point of view, there is a good deal to commend such a prohibition. In these days of expanded director responsibility under both federal and state law, lawyer-directors can expect to be targets of litigation. Although the standard of director liability is sometimes phrased in objective terms, courts expect more of a lawyer-director than they do, for example, of a sociology professor director. The ALI Federal Securities Code specifically recognizes such a sliding standard in defining reasonable investigation or care. I also remind you of the judicial analysis of lawyer-director Grant in the BarChris case. The problem does not necessarily stop with the liability of the particular lawyer-director. You will recall that in Larza v. Drexel, another episode in the BarChris saga, the plaintiff tried to hold the Drexel firm liable because of its partner's, i.e., Coleman's, alleged breach of duty. Why was Coleman on the board? Coleman was on the board because Drexel had been an underwriter of BarChris securities and felt some responsibility for the company operations. The case then raised the problem of deputization, i.e., was Coleman deputed as Drexel's representative on the board. I think it is appropriate to