Recent business scandals and the regulatory responses to them raise basic questions about the role of the business lawyer. Lawyers were major participants in Enron and in similar controversies over corporate disclosure. Lawyers have also been key players in the corporate tax shelter industry. In both instances, their conduct has prompted federal regulations that repudiate to an unprecedented degree the bar's traditional understanding of its structure and obligations.
The provision of the Sarbanes-Oxley Act of 2002 mandating "up-the-ladder" reporting by public corporation counsel was the first federal statute in American history to regulate lawyers directly and broadly. The second came only two years later – the "Jobs Act" provision imposing requirements on lawyers engaged in shelter-like tax planning. Both initiatives significantly abrogated the principle of professional "self-regulation" – the name that both the bar and social science give to the alliance of trade associations and compliant state judiciaries that have traditionally asserted regulatory authority over lawyers. And both statutes unsettle long-rooted conceptions of client loyalty.
William H. Simon,
After Confidentiiality: Rethinking the Professional Responsibilities of the Business Lawyer,
Fordham L. Rev.
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