Are boards expressing a high level of concern about personal liability growing out of securities class action litigation?
Wardell: Exposure to litigation is a constant concern. Most of the boards that I am working with are made up of very capable and mature people. They usually frame the question in a slightly different way. They ask whether they have exercised the time, care and diligence necessary to discharge their responsibilities. They are much more focused on their obligation to the shareholders than on their concern for their own liability. Editor: Many companies have gotten into trouble because of accounting issues, such as those involved in the recent backdating scandals. Does your firm have lawyers who are well versed in law and accounting issues? Wardell: The lawyers in our corporate area begin their training with financial statements and develop an understanding of what is involved in creating the footnotes and what the accounting standards are for such things as “materiality” and how they differ from the legal standards. Within the corporate finance group we begin with the premise that due di
