CLIFFORD CHANCE

18 December 2002

Jonathan G. Katz
Secretary
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549-0609

Dear Mr. Katz

File No. 33-8150.wp Proposed Standards of Professional Conduct for Attorneys

Clifford Chance is submitting this letter to comment upon the proposed 17 CFR Part 205 described in Release No. 33-8150 (the "Release"). This is one of two letters you have received from Clifford Chance. It contains our response to the Commission requesting the views of multijurisdictional law firms on the rule proposed in the Release (the "Proposed Rule"). The other letter comments about the effects of the Proposed Rule upon US lawyers who practice law in the US.

Clifford Chance, organized as a New York limited liability partnership, operates through 32 offices in 19 countries, including six offices in the United States. We have almost 3,000 legal staff and 665 partners. Our lawyers include those qualified in each of the 19 countries where we practice. More than 650 of our lawyers, including 121 partners, practice in the United States. Approximately 70 of our US qualified lawyers practice outside the United States.

Multijurisdictional law firms are a relatively recent development. Until 1992, the English Law Society prohibited English solicitors from practising in partnership with non-solicitors (including US lawyers). We believe that multijurisdictional partnerships have developed during the last ten years in response to client requirements arising from the globalization of the markets and crossborder business generally. We, and other multijurisdictional law firms, take pride in bringing together legal expertise from different jurisdictions operating within a single partnership to serve clients. We have no doubt that, for example, practising within one partnership means that our multijurisdictional expertise (and sometimes multilingual skills) results in better disclosure for our foreign registrant clients. This is because, among other reasons, better and more frank communication may occur among those within the same firm with the goal of serving a client of that firm.

Our other letter to the Commission sets out the issues that US domestic lawyers face in the US. For non-US lawyers, and for US lawyers providing advice overseas (whether or not resident overseas), compliance with the Proposed Rule would require US and non-US lawyers to violate laws and rules in many countries regarding professional obligations, and could subject such lawyers, because of their compliance with Part 205, to civil and criminal sanctions. We have no doubt that if the Proposed Rule is adopted, the consequences will have the unintended effect of chilling communications between US lawyers and their counterparts, and between lawyers and their clients. Litigation, much of it likely to be frivolous, will further damage frank and open communication between lawyers of different jurisdictional expertise and between clients and their lawyers. The result will be the frustration of the objectives of Section 307.

Based on our multijurisdictional experience, we believe that problems with local regulation in a domestic setting are significantly amplified when applied in an international setting. We suggest that this is true for the Proposed Rule. Serious flaws in the Proposed Rule for the domestic practice invites large classes of those affected overseas to request blanket exemptions. We note the following:

    Foreign Attorneys. The Proposed Rule will create significant issues for foreign lawyers because (i) of conflicts between the Proposed Rule and local rules governing the conduct of foreign lawyers (ii) the expertise of a local lawyer may not extend to difficult determinations under US law and the Proposed Rule and (iii) the broad definition of "Practising before the Commission" means that a foreign lawyer may be caught unexpectedly by the Proposed Rule when the advice rendered is tangential.

    US Attorneys Advising Overseas. US bar regulations such as those in New York subject foreign lawyers practising within their jurisdiction to their professional responsibility rules. This is also true elsewhere. In the UK, US lawyers based in England with any US or UK law firm that is in partnership with English solicitors are subject to the professional conduct rules of the English Law Society. US lawyers will therefore be subject to the same conflicts between US and English rules as English solicitors. An exemption for foreign lawyers under US law will not remove the conflict for US attorneys practising in foreign jurisdictions.

    Foreign Governmental Registrants. The Proposed Rule assumes a US corporate structure. As the Release intimates, the Proposed Rule will not be workable if applied to foreign governments, which do not have a board of directors, much less independent board committees.

    Foreign Private Issuers. Because the Proposed Rule assumes a US corporate structure, the mechanics of the rule will be difficult, and sometimes impossible to implement, if a foreign jurisdiction follows a different corporate governance model such as having a supervisory and management board. Moreover, a significant number of foreign registrants have issued debt securities pursuant to a registration statement but do not have any of their securities listed on US exchanges and therefore the Commission cannot assume that foreign registrants will be required to comply with the corporate governance rules of US securities exchanges mandated by Sarbanes-Oxley. The Commission should be extremely careful in forcing US corporate governance requirements on foreign registrants, especially if not mandated by statute.

    Private Litigation. Even if the Commission revises its Proposed Rule for it to have exclusive jurisdiction and to exclude any private right of action, the Commission has no authority to exclude causes of action arising under foreign law resulting from conflicts between the Proposed Rule and foreign law.

The foregoing issues do not have easy solutions. Our view is that these issues in part stem from the Proposed Rule being overly broad and overly prescriptive rather than extra territorial. We believe that if the issues in the US for US lawyers are properly addressed, many of the intractable issues under the Proposed Rule in an international context will also be mitigated. Even then, however, many difficult issues may remain. We believe that the Commission should take additional time to obtain the views of interested persons on these extremely complex issues.

We request that the Commission not go beyond what is absolutely necessary for purposes of the January 26, 2003 deadline. In particular, we strongly urge the Commission to take no action prior to the deadline with respect to non-US lawyers. We also ask that the Commission carefully consider revising the Proposed Rule as described in our other letter of today's date to the Commission.

Very truly yours,

Clifford Chance