Lawyers who serve a company both as legal counselor and as business advisor may get mired in a gray area.
You may want to reconsider inviting your lawyer to be on your company's board of directors. The trouble, says Dennis O'Connor, an attorney with a Waltham, Mass., firm specializing in corporate law, is that things can get confusing when a lawyer 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 acts counter to a lawyer's recommendation to know whether he is risking an illegality or simply disagreeing on business strategy," O'Connor says.
An experienced board member himself, O'Connor says it's standard policy at many law firms to sit on the boards of companies they advise, making it difficult for clients to sever the relationships. His own firm has taken a different -- and he thinks healthier -- approach. O'Connor attends as many as eight board meetings a month, but only as a nonvoting legal and business adviser. Under these well-defined circumstances, in which the voteless attorney wears only a legal hat, having a lawyer attend meetings is a must, O'Connor says.
"Many companies try to save money by not having a lawyer present at all, but that can hold up a decision when a director wheels around and says, 'Let's see what the lawyer has to say about this,' and there's no lawyer there.'