Image by WikiImages from Pixabay

Hating lawyers may not have started with Shakespeare, but he didn’t help things when he wrote “The first thing we do, let’s kill all the lawyers” in Henry VI.  Any lawyer who’s been practicing law for more than a couple of weeks knows that part of the price of bar admission is having to endure lawyer jokes (most of which aren’t very good) and experiences like having a client say to you at the outset of your first meeting, “just so you know, I don’t like lawyers” or words to that effect.

It’s particularly painful, however, when an attack on our profession comes from one of our own, who also happens to be a member of the Securities and Exchange Commission.  I refer to a March 4 speech by Commissioner Allison Herren Lee in which she notes her “deep regard for the ideals of public service that our profession represents” and that her “belief in the ideals of the profession – ideals I know you all share – has only grown stronger with time” but then goes on to castigate corporate lawyers for failing to fulfill our “role…as gatekeepers in the capital markets.”  She distinguishes corporate lawyers from litigators – a dubious distinction that suggests we should be less zealous in representing our clients than our litigation colleagues – and says that in passing Section 307 of the Sarbanes-Oxley Act (more on that below) “Congress was concerned…that counsel often acted in the interests of the executives who hired them rather than the company and its shareholders to whom their duty and responsibility is [sic] owed.”

There is more.  Commissioner Lee places blame on lawyers for Enron, the stock option backdating scandal and mutual fund market timing cases, and “to some extent…the 2008 financial crisis.”  Given her views about the need to require more robust disclosure about climate change, perhaps we should be grateful that she does not seek to hold us responsible for climate change itself, COVID, or any number of other social, geopolitical, and other problems faced in today’s complex world.

The reason for all this bad-mouthing is Commissioner Lee’s view that corporate lawyers should be subject to discipline when they give bad advice and that we all need better professional standards to better assess the quality of our advice.  In principle, I agree.  But I disagree when she suggests that Section 307 of SOX, the provision mandating “that the SEC ‘issue rules’ – plural – adopting ‘minimum standards of professional conduct for attorneys…practicing before the Commission’” – is one such standard.  She bemoans the facts that the SEC has thus far adopted only one such rule – the “up-the-ladder” standard – and has never brought any enforcement actions under that standard.  However, there are reasons why the SEC has not adopted additional rules or brought cases.  One such reason is that lawyers advise but, in my experience, rarely decide what course of action to take.  I have often said that it is my role to point out the risks but it is the client’s role to decide whether to take them, and that the only time I will fall on my sword (metaphorically, of course) is when a client’s decision violates the law or is so outrageous that no sane person would come out that way.  And, for the record, I have fallen on my sword a few times.

Which brings me to another point. Yes, there are bad lawyers and lawyers who give bad advice and do other bad things.  However, in the course of my very long career, I can count on the fingers of one hand the lawyers in those categories – and I’d still have a finger or two to spare.  The overwhelming majority of lawyers I know are extremely conscientious and thoughtful about the advice they give and take their roles as “gatekeepers” very seriously indeed.  We work hard and often lose sleep worrying about doing the right thing and persuading our clients to follow our guidance.  What Commissioner Lee is suggesting would punish the many for the sins of a few. A very few.  Regulators often do that, but IMHO it’s wrongheaded and doesn’t improve things.

By the way – there is reason to believe that when Shakespeare penned that line, it was corrupt, unethical lawyers he was referring to (see here).  And at least some of those clients who’ve started out by telling me that they don’t like lawyers have proven to be good clients and even good friends.