Changing SOX –Widespread Reorganizations of Law Departments?

A group of local general counsel met recently and the discussion turned to Sarbanes-Oxley.  One person maintained, rather strenuously, that many law departments were reorganizing to address the Act’s requirements.  Notably, all practicing lawyers are being made to report to the general counsel and board members are taking a keener interest in the effectiveness of the law department.

I am dubious of the reporting-change claim and ignorant of the board claim.  In my consulting and metrics gathering (two editions of a book on law department benchmarks), it has been clear that nearly all practicing lawyers in US corporations – except tax lawyers, who report to the CFO typically – report directly or ultimately to the general counsel.  (Overseas lawyers are a different reporting breed, as many of them report to a regional executive and dotted line, maybe, to the US general counsel.)  Hence, how can there be any organizational change prompted by the infamous Act?

Increased board involvement with the law department has some plausibility, but my hunch is that it may be talked about more than acted on, if it is even talked about.  Boards care about the legal implications of major decisions to be made, and they care about material litigation, but as to the internal workings of the law department, they are probably unconcerned.

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