Mr. Jonathan G. Katz
Securities & Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0609

April 4, 2003

Re: Proposed Rule: Implementation of Standards of Professional Conduct for Attorneys (File No. S7-45-02)

Dear Mr. Katz:

We appreciate the Commission's consideration of our previous comment letter on the original proposal for standards of professional conduct for attorneys. We are pleased to have this additional opportunity to comment on the Commission's revised proposal on this subject. The revised proposal appears in Release No. 33-8186 (the New Proposing Release).

This letter is being submitted on behalf of the law firms named above. We are all international law firms that have established US securities law practices. All of us have US attorneys as partners and associates and five of us have offices in the United States. However, the majority of our attorneys are admitted to practice law in jurisdictions other than the United States and are not US-qualified. Our firms represent a number of companies, both domestic and foreign, that are registered under the Securities Exchange Act of 1934 (the Exchange Act), on matters of both US and foreign law.

We commend the Commission for the Part 205 attorney conduct rule that has already been adopted (the Final Rule) and for the Commission's willingness to listen to and address the concerns of the legal profession, both inside and outside the United States. In particular, the Final Rule provides important relief in the event of conflicts with the laws of other countries and significantly mitigates the severity of the rule as applied to non-US lawyers. However, the New Proposing Release presents some significant issues, concerning both the continued proposal of a "noisy withdrawal" requirement and the newly proposed requirement of attorney withdrawal followed by the issuer reporting to the SEC (the Alternative Proposal).

I. The Commission should not impose additional obligations on attorneys or issuers beyond those adopted in the Final Rule. If the Commission adopts new requirements as proposed, the Alternative Proposal is significantly preferable.

The Final Rule imposes important new requirements for lawyers to report evidence of material violations of law "up the ladder" within their issuer clients. However, we believe that the Commission should not impose additional new obligations for a lawyer to withdraw from representing the issuer or for either the lawyer or issuer to report to the SEC. Every state in the United States and many jurisdictions outside the United States already have professional regulations with respect to attorney withdrawal in cases of client misconduct. Attorneys should continue to be governed by those rules without special rules being imposed on securities lawyers as a particular group. Furthermore, any requirement that either the lawyer or issuer notify the SEC of the lawyer's withdrawal risks serious consequences for the attorney-client relationship generally. The notice requirement could have a chilling effect on issuers, discouraging them from consulting their lawyers and compromising the core responsibility placed on an attorney that his or her loyalty is owed solely to the client, except in cases clearly involving severe, preventable consequences to third parties. We question whether the balance of conflicting public policies should lead to such a notice requirement, absent a Congressional direction similar to that which led to the Final Rule.

If the Commission does adopt a requirement of withdrawal coupled with notice, the Alternative Proposal is significantly preferable to the noisy withdrawal regime originally proposed. As many commentators have already indicated, noisy withdrawal violates fundamental principles of attorney-client confidentiality by requiring a lawyer, under certain circumstances, to report his or her client to the authorities and to disaffirm publicly the client's documents. It also raises the possibility that an attorney will face conflicting obligations in his or her jurisdiction of qualification or practice. The Alternative Proposal would remove certain problematic aspects of the original proposal affecting a lawyer's basic duty of confidentiality to clients. However, the Alternative Proposal still creates potential conflicts with local laws or ethical rules in some foreign jurisdictions. For example, some jurisdictions, such as Italy, Germany and the Netherlands, require an attorney who withdraws from a representation to act carefully so as not to prejudice the client. There is a risk that compliance with the Alternative Proposal could force an attorney to violate such rules, subjecting the attorney to possible disciplinary sanctions and civil liability. Therefore, we reiterate our request that no withdrawal and notice requirement be adopted.

II. The Commission should clarify that the safe harbor under Section 205.6(d) covers applicable foreign law or ethical obligations for lawyers.

In many foreign jurisdictions (as in the United States) the legal profession is subject to a variety of legal requirements, professional disciplinary rules and court rules. We request a revision to the safe harbor of Section 205.6(d) of the Final Rule that would expand its coverage to "applicable foreign law or ethical obligations." This would eliminate doubt concerning whether rules of practice have the force of law in a particular country.

III. Under the Alternative Proposal, issuers should be required to report only the fact that the attorney has withdrawn.

The Alternative Proposal would require an issuer, after receiving notice that an attorney has withdrawn pursuant to the attorney conduct rules, to "report such notice and the circumstances related thereto" to the SEC within two business days. We believe that it is inappropriate to require issuers to report the factual circumstances surrounding an attorney's withdrawal. Instead, if the Commission adopts the Alternative Proposal, issuers should be required only to report the fact that the lawyer has withdrawn "for professional considerations."

The requirement that issuers report the circumstances relating to an attorney's withdrawal calls for the disclosure of information that is likely to be uncertain and preliminary. It would also force issuers to report opinions and conclusions with which they disagree and that could have an irreversible adverse effect on their business notwithstanding the ultimate outcome of the issue. These disclosures also would have potentially serious consequences with respect to the loss of privilege. This is true not only in the United States, but also in other jurisdictions such as England and Hong Kong. We believe that a better rule would require issuers to report the fact that an attorney has withdrawn and to state that the withdrawal was, to use the Commission's language, "for professional considerations." This notice would be sufficient to inform the Commission and investors of the attorney's action and would indicate that the attorney had a material legal or professional reason to withdraw. However, it would not require the disclosure of uncertain, preliminary information and would avoid difficult questions relating to the loss of privilege arising from the forced disclosure of confidential information by the issuer.

If the Commission does require issuers to report the factual circumstances of an attorney's withdrawal, the deadline of two business days should be extended. Such a short deadline for a report of this nature, which is already likely to be based on preliminary information, only increases the probability that the information about the surrounding circumstances may be inaccurate or incomplete.

IV. Form 20-F is inappropriate for reports by foreign private issuers of an attorney's withdrawal.

We believe that it is inappropriate for foreign private issuers to report an attorney's withdrawal on Form 20-F, as proposed. Such reports do not fit within the purpose of Form 20-F, even in the newly-created "abbreviated" version of the filing contemplated by the New Proposing Release. In particular, we believe that issuers should not be required to report ongoing events occurring during the year on a form that was not designed or intended for interim disclosure. Furthermore, use of the Form 20-F (which already serves the dual function of registering securities and providing annual reports) to report an attorney's withdrawal might result in difficulty in finding relevant reports on EDGAR.

Because we believe that the primary purpose of the requirement to report an attorney withdrawal should be one of notice - making investors and the Commission aware of the attorney's withdrawal - if the Alternative Proposal is adopted, we believe that it should be sufficient to require the fact of the attorney's withdrawal to be "made public, including in the United States", rather than filed or furnished with the Commission. Of course, we would expect many issuers, upon making such information public, to separately furnish the release of such information to the Commission under cover of Form 6-K in accordance with their standard practices.

If the Commission were to adopt the Alternative Proposal and require notice of an attorney's withdrawal to be provided directly to the Commission, we believe that it would be more appropriate for that notice to be provided on Form 6-K than Form 20-F. Form 6-K is better suited for reporting an attorney withdrawal, based on its existing use for ongoing reporting by issuers. Furthermore, we do not believe there is a compelling reason for the Commission to require this notice of withdrawal to be "filed" (on Form 20-F) rather than "furnished" (on Form 6-K), since the report of an attorney's withdrawal would merely serve a notice function to the Commission and investors and it is not contemplated that the notice would involve substantive additional corporate disclosure which could be expected to form the basis of further statutory liability.

On the basis of the discussion above, we do not believe that the Commission should create a new form for foreign private issuers to disclose an attorney's withdrawal.

* * *

We appreciate this additional opportunity to comment on the Commission's proposals, and we would be happy to discuss any questions the Commission or its staff may have with respect to this letter. Questions may be addressed to any of the following:

Allen & Overy : Thomas Werlen
Clifford Chance LLP : Daniel Bushner
Freshfields Bruckhaus Deringer : Thomas Joyce
Herbert Smith : Alex Bafi
Linklaters : Larry Vranka
Lovells : Robert Ripin
Norton Rose : Thomas Vita

Very truly yours,