With corporate scandals abundant, this much is clear: When it comes to corporate governance, gray areas aren’t good. In the past few months, the Securities and Exchange Commission has called upon the New York Stock Exchange, Nasdaq, and the professional organization Financial Executives International to recommend stricter governance standards for officer and director qualifications, among other things. The result has been a flurry of opinions and proposals about shoring up board ethics, structures, and procedures. There’s no assurance that lawyers who serve as directors of client corporations will escape scrutiny.

Sitting on a client’s board is a common practice. According to recent SEC proxy statements, partners from 69 of the AmLaw 100 firms sit on boards of NYSE-listed companies; 61 of those lawyer-directors’ firms have performed legal services for the companies. While the practice may be widespread, it’s also risky. The American Bar Association’s Model Rules of Professional Conduct do not bar lawyers from sitting on clients’ boards, but the ABA Standing Committee on Ethics and Professional Responsibility has discouraged the practice in a series of reports, says Lawrence Fox, a former committee chairman. Fox, a partner at Philadelphia’s Drinker Biddle & Reath, frames the problem as a conflict: How can a lawyer claim to be an independent director while profiting from legal work performed for management? “Ninety percent of the time it all works out fine,” Fox says. “But when everything hits the fan, this is another black eye.”

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