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“�Cuidado, hay tiburones!” I was walking with my family on a deserted beach in Mexico several years ago and noticed a crooked sign bearing these words. In light of the exclamation marks and my recollection that the word “cuidado” was some type of warning, we dug out our Spanish-English dictionary. Fortunately, before getting into the water, we learned the valuable lesson that “tiburones” are sharks. Clear and effective communication never should be taken for granted. What may be self-evident to one person may not be as clear to another. As lawyers, we should inform clients of developments that come to our attention that may affect the client’s business. Such developments may take many shapes or forms. Whether it is a recent court decision, a regulatory development or a news item buried in one of the inside sections of The Wall Street Journal, from time to time every client faces significant challenges in its business and legal environment. The most helpful outside counsel makes an extra effort to assist in-house lawyers in staying well informed. This requires outside counsel to be proactive in communicating with in-house lawyers. Too often, there is a tendency merely to be reactive to the client’s needs. In fact, in busy times it’s perhaps the norm for outside counsel to assist a client only when called upon to do so. Given the intense competition between large firms for good work from sought-after clients, proactive communication is not just a goal — it’s a necessity. When a new law hits the books or a court publishes a landmark opinion, firms scramble to prepare “alerts” or similar summaries to distribute to their clients and friends (a/k/a business targets). These materials also often are published on a firm’s Web site for public consumption. To be late with this type of client communication is frowned upon in our business and may be worse than no communication at all. We hear of instances frequently where in-house lawyers receive three to five different “alerts” relating to the same subject matter from different outside firms. To be the first in this line gives an impression of “cutting-edge” skills. Most outside counsel face a broader range of issues on a daily basis than that seen by in-house lawyers. This is especially true in the case of large firms with diversified practices. Outside counsel should take advantage of their access to legal resources and information by offering training opportunities to in-house lawyers. Such programs also typically reward attendees with valuable CLE credit. If they are not already taking advantage of this opportunity, in-house lawyers should inquire about any such training that is germane to their practice areas. Of course, an open line of communication between outside counsel and in-house lawyers also can be rewarding to outside counsel from a business development perspective. A well-timed phone call or client lunch can lead to the “by the way … ” that may result in a nice piece of business. BETTER PARTNERS In the wake of the Enron Corp. and WorldCom scandals, the role of outside counsel as a communicator to publicly traded companies has been redefined. Earlier this year, the Securities and Exchange Commission (SEC) issued rules establishing “minimum standards of professional conduct for attorneys” requiring outside counsel to report “evidence of a material violation of securities laws or breach of fiduciary duty or a similar violation” by a company to the company’s “chief legal officer.” If the chief legal officer does not respond appropriately, the rules require outside counsel to report such matter(s) “up-the-ladder” to other representatives of the client. Firms across the country are working to understand and define the full implications of this far-reaching law affecting all attorneys who “appear and practice” before the SEC. A primary policy of this SEC initiative is to encourage proactive communication between public companies and their outside counsel and more involvement by outside counsel in the compliance by public companies with securities laws. Ironically, however, an effect of these new rules may be to suppress these communications. This new law may encourage some public companies to shield their outside counsel from material internal developments, facts affecting corporate disclosures or transactions presenting possible conflicts of interest. This outcome clearly would be contrary to the intentions of Congress and the SEC in adopting these new rules and may create a point of tension as public companies learn to cope with these new regulations affecting corporate governance. So is it incumbent upon outside counsel to pick up the telephone and call his or her public company client on a regular basis? Not always. While outside counsel now appear to have a heightened duty to stay in touch with their clients and abreast of material developments, this interaction must be a two-way street. Perhaps the greatest fear is the situation presented by the silent or reclusive in-house lawyer who is tardy in disclosing material developments to outside counsel. A subsequent analysis may reveal that an issue slipped past or, even worse, that a statutory deadline was missed. This “island” effect arising from an in-house lawyer’s aversion to proactive communications is likely to become a critical warning sign to any lawyer (in-house or outside) who works with a public company. The practice of law today is demanding in numerous respects, particularly considering the current regulatory environment. Rather than just walking on the beach, many feel that they already are in the water with the “tiburones.” By focusing on proactive communications and sharing substantive information on a regular basis, outside counsel and in-house lawyers can partner to be better lawyers. Taylor H. Wilson is a partner in the business transactions section of Haynes and Boone (www.hayboo.com)in Dallas. If you are interested in submitting an article to law.com, please click here for our submission guidelines.

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