Atlantic Legal Files Brief in Important Corporate Governance Case

In Pereira v. Cogan , arising out of the bankruptcy of Trace Holdings, Inc., Atlantic Legal filed an amicus curiae brief in the U.S. Court of Appeals for the Second Circuit that focuses on the responsibility of corporate lawyers. The trial court found the chief legal officer of a closely held Delaware corporation personally liable for more than $20 million due to his failure to direct the activities of the board of directors. Atlantic Legal represented the prestigious Corporate Law Departments Section of the Los Angeles County Bar Association (which is comprised of more than 600 corporate lawyers) and twelve current or retired general counsel of major United States corporations.

Although the transactions underlying the findings of liability in the case were questionable, the duty imposed by the district court judge on a corporation’s chief legal officer, according to the amici , "fashioned an intolerable, unnecessary and unworkable responsibility for corporate chief legal officers." Atlantic Legal argued that the legal officer was entitled to the protection of the business judgment rule and that the trial court had reversed the traditional roles of the board and legal counsel. This appeal is of broad national interest and Atlantic Legal’s amicus brief may help to define more precisely the obligations of those lawyers who counsel senior management.