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Section 307 of the Sarbanes-Oxley Act authorizes the SEC to prescribe "minimum standards of professional conduct" for attorneys "appearing or practicing" before it. Although the initial debate has focused on issues of confidentiality, this terse statutory provision frames and seemingly federalizes a much larger question: What is the role of the corporate attorney in public securities transactions? Is the attorney's role that of (a) an advocate, (b) a transaction cost engineer, or, more broadly, (c) a gatekeeper – that is, a reputational intermediary with some responsibility to monitor the accuracy of corporate disclosures? Skeptics of any gatekeeper role for attorneys have long argued that (a) such a role conflicts with the traditional obligations of loyalty that attorneys owe their clients, and (b) imposing gatekeeping obligations on attorneys will chill attorney-client communications and thereby reduce law compliance. This Essay examines these arguments that attorneys make inferior gatekeepers and replies that securities attorneys can and do perform a limited "gatekeeping" function and that imposing such obligations on attorneys should neither chill socially desirable client communications nor reduce the attorney's influence over the client (and probably will increase that leverage). Finally, this Essay proposes specific standards and obligations that the SEC might adopt to enhance the securities attorney's role as a gatekeeper. Going beyond the current "noisy withdrawal" issue, it proposes both limited certification and independence standards.


Law | Law and Economics | Legal Ethics and Professional Responsibility