Limits on Lawyers
Lawyers make good advisers, but their role should be clarified before they're invited to join the board ofdirectors. The trouble, says Dennis O'Connor, a lawyer with a Waltham, Mass., firm specializing in corporate law, is that things can get confusing when alawyer is asked to wear two hats? those of business adviser and legal counselor. "There's a gray area in between, and it can be hard for a CEO who actscounter to a lawyer's recommendation to know whether he is risking an illegality or simply disagreeing on business strategy," says O'Connor.
It's standard policy at many law firms to sit on the boards of companies they advise, says O'Connor, because that makes it difficult for clients to sever therelationships. His own firm has a different? and he thinks healthier? approach. O'Connor attends as many as eight board meetings a month, but only as anon-voting legal adviser. Businesses get the best of both worlds: legal advice, without the confusion of wondering in whose interest the advice is given.
"Many companies try to save money by not having a lawyer present at all," says O'Connor, "but that can hold up a decision when a director wheels aroundand says 'Let's see what the lawyer has to say about this."