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The Sarbanes-Oxley Act is giving a lot of people heartburn these days, but few are suffering as much as the members of the American Bar Association. The ABA had long fought a proposal to require a company’s lawyers to report wrongdoing to the board of directors, only to see Congress insert just such a provision into the new corporate governance act. So how is the association responding to its defeat? By considering an even tougher reporting requirement. In July a special task force on corporate responsibility issued a report on possible changes to the ABA’s influential Model Rules of Professional Conduct. A key recommendation would significantly alter the scope of attorney-client privilege: Corporate lawyers would be required to disclose to outside authorities-not just to a company’s board-any crime or fraud that was “reasonably certain to result in substantial economic loss,” if the attorney’s services had been used to further that crime or fraud. The ABA’s House of Delegates will decide in February whether to make the change. A similar amendment to the model rules was soundly rejected by delegates in August 2001. But Leslie Jacobs, a partner at Cleveland’s Thompson Hine who serves on the ABA board of governors, is confident that the vote will be different this time, given the breadth and depth of corporate malfeasance revealed in the past year. “Sarbanes-Oxley is a floor, not a ceiling, on ethics,” says Jacobs. Of course, not everyone sees it that way. Lawrence Fox, a partner at Philadelphia’s Drinker Biddle & Reath, thinks that reporting requirements are an overreaction designed to turn lawyers into government snitches. “No one has shown that if a lawyer had been able to do ‘x’ under the rules, none of [the recent corporate wrong-doing] would have happened,” Fox maintains. One thing both sides agree on is that the debate will be heavily influenced by the SEC’s actions between now and the end of January, when the agency must issue the new reporting regulations mandated by Sarbanes-Oxley. “I just hope the SEC can give some precision to all this,” says Fox. If the agency doesn’t, then the ABA may step into the breach itself.

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