American Society of Corporate Secretaries
December 18, 2002
Jonathan G. Katz, Secretary
RE: File No. S7-45-02
Dear Mr. Katz:
On behalf of the American Society of Corporate Secretaries, Inc., we are pleased to have the opportunity to comment on "Proposed Rule: Implementation of Standards of Professional Conduct for Attorneys." The Society has over 3,800 members representing over 2,500 corporations in the United States and other countries.
The Society recognizes the Commission's objective of implementing the legislative mandate of Section 307 of the Sarbanes-Oxley Act of 2002. We agree with the Commission's determination to enhance and clarify attorney responsibilities during this important time of restoring investor confidence. However, we believe that certain provisions of the proposed rule require more time for consideration and debate than as permitted under the strict deadlines of Sarbanes-Oxley.
We understand that the Commission is required by Section 307 to adopt a final rule by January 26, 2003. We also recognize the truly incredible job the staff has accomplished in meeting the blistering pace of rulemaking mandated by Sarbanes-Oxley. Keeping both of these sentiments in mind, we believe that those portions of proposed Rule 205 that are not mandated by Section 307 should continue to be considered and debated beyond January 26th.
Both the lawyers and non-lawyers in our membership are concerned that a hastily adopted rule of the magnitude proposed could unnecessarily inhibit the free flow of information between in-house lawyers and their corporate clients. We strongly support the "mandatory up the ladder" concepts embodied in the proposed rule. However, we are concerned that the proposed "noisy withdrawal" procedures (which are not required by Sarbanes-Oxley) might cause corporate clients to think twice before communicating vital information to their lawyers - precisely the type of behavior that the Commission should encourage. In other words, we believe that, as proposed, this portion of the proposed rule conflicts with public policy.
We recommend that the Commission reconsider promulgation of the "noisy withdrawal" provision as it appears to undermine the attorney-client privilege and the duty of confidentiality that attorneys have long owed their clients. Accordingly, we suggest that the Commission deliberate further regarding the implications of this far-reaching provision before turning it into new law.
cc: Hon. Harvey L. Pitt, Chairman