“These are troubled times. It feels like déjà vu again,” said Thomas Sager, general counsel at DuPont, as he reflected on what the Wall Street financial crisis will mean for the post-Enron regulatory environment. Sager was one of four in-house lawyers who spoke to federal judges about the “new realities facing corporate counsel,” on day three of the Just the Beginning Foundation conference in Washington.
Sager said the Enron scandals made both judges and juries all the more suspicious of corporate behavior, and he predicted a “second wave of concern” following the events of the last fortnight. “It will be met again with increased scrutiny, a large distrust of corporations at large, regardless of where you compete . . . increased disclosure . . . more regulation and yes, litigation.” Sager said plaintiffs counsel were always ready to draw analogies with the “worst corporate wrongdoers,” and he appealed to judges not to be swayed. “It’s important, as influential people in this room, not to judge all corporations, or cast them in the same light or paint them with the same brush.”
Sherry Bellamy, deputy general counsel at Verizon Business, said the latest crisis will put the Sarbanes-Oxley rules directly under the microscope, confronting regulators, once again, with the question what level of disclosure is appropriate. She expects to see pressure for “even more onerous requirements” on financial reporting.
All of the panelists criticized the burdens of e-discovery and its tendency, in their view, to be misused by plaintiffs to force settlement. Sager warned that “complex case discovery becomes a leverage tool,” and Virginia Hoptman, a partner at Womble Carlyle Sandridge & Rice, urged courts and regulators to limit “zealous discovery to something that is reasonable and actually warranted under the circumstances.”