An excellent article in Directors & Boards, Vol. 33, Fourth Quarter 2008 at 42, explains why general counsel might want to negotiate a personal indemnification agreement before they take the helm. Corporate bylaws may fall short of protecting them in the event of a claim and D&O insurance has holes. The author, Priya Cherian Huskins at Woodruff-Sawyer & Co.,
recommends supplementing those protections with personal indemnification contracts, especially those that accelerate when legal fees are advanced to the indemnitee.
As I read the article, I wondered how much companies spend under indemnification agreements and whether those outside counsel fees are included in the budget of the law department.