GCs Fear Litigation Strategies Would Be Revealed if Rule Changes
The ABA is among the critics of a proposed accounting rule change that would require public companies to disclose more details about the risks of litigation.
In-house lawyers and other critics say the rule change would force companies to reveal details that could provide opponents with a preview of their litigation strategies, the Recorder reports. The ABA is particularly concerned the rule would result in waiver of the attorney-client privilege.
The proposed changes (PDF posted by the Recorder) by the Financial Accounting Standards Board would lower the threshold for reporting a potential loss from a lawsuit from “probable” to anything more than “remote,” the story says. Companies would be required to estimate legal costs and the likely outcome, and would have to explain the reasoning for their predictions.
The ABA is drafting a letter criticizing the proposal, says R. William Ide III, chair of the ABA Task Force on Attorney-Client Privilege. “The concern is that there is case law on work product and on attorney-client privilege,” Ide told the Recorder. “If you reveal discussions of a lawyer and a client to a third party, then you waive it.”
